Question
XYZ Limited has 30 million equity shares outstanding. The book value per share is 60 and the market price per share is 180. XYZ has
XYZ Limited has 30 million equity shares outstanding. The book value per share is 60 and the market price per share is 180. XYZ has two debenture issues outstanding. The first issue has a face value of 400 million, 13 percent coupon, and sells for 95 percent of its face value. It will mature in 6 years. The second issue has a face value of 300 million, 12 percent coupon, and sells for 108 percent of its face value. It will mature in 7 years. XYZ also has a bank loan of 300 million on which the interest rate is 14 percent. What are XYZ's capital structure weights on a) Book value basis? b) Market value basis?
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