Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Ten Pins Manufacturing has 9 million shares of common stock outstanding. The current share price is $88, and the book value per share is $7.
Ten Pins Manufacturing has 9 million shares of common stock outstanding. The current share price is $88, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value of $80 million and a coupon rate of 5 percent and sells for 98 percent of par. The second issue has a face value of $55 million and a coupon rate of 6 percent and sells for 106 percent of par. The first issue matures in 20 years, the second in 8 years. a. What are the company's capital structure welghts on a book value basis? (Do not round Intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) Equity/Value Debt/Value b. What are the company's capital structure weights on a market value basis? (Do not round Intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) Equity/Value Debt/Value c. Which are more relevant, the book or market value weights? O Market value O Book value
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started