Question
Vedder, Inc. owns 5 million common shares outstanding. Current share price is $73 and book value per share is $9. Vedder also has two outstanding
Vedder, Inc. owns 5 million common shares outstanding. Current share price is $73 and book value per share is $9. Vedder also has two outstanding bond issues. The initial bond issue has a face value of $60 million, with a coupon rate of 7 percent and selling at 98 percent of the pair. The second issue's face value is $40 million, the coupon rate is 6.5 percent, and it's selling at 97 percent of the pair. The first issue matures in 20 years, the second in 12 years. |
Necessary: | |
(a) | What are the capital structure weights of the company on the basis of book value? |
(b) | What are the capital structure weights of the company on the basis of market value? |
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Essentials of Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
8th edition
78034752, 978-0078034756
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