Question
Ten Pins Manufacturing has 6.4 million shares of common stock outstanding. The current share price is $59, and the book value per share is $4.
Ten Pins Manufacturing has 6.4 million shares of common stock outstanding. The current share price is $59, and the book value per share is $4. The company also has two bond issues outstanding. The first bond issue has a face value of $60 million and a coupon rate of 6.5 percent and sells for 108.3 percent of par. The second issue has a face value of $50 million and a coupon rate of 6.8 percent and sells for 108.9 percent of par. The first issue matures in 8 years, the second in 27 years. a. What are the companys capital structure weights on a book value basis? b. What are the companys capital structure weights on a market value basis? c. Which are more relevant, the book or market value weights? Why?
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