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Dinklage Corp. has 9 million shares of common stock outstanding. The current share price is $81, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $80 million, a coupon of 10 percent, and sells for 96 percent of par. The second issues has a face value of $50 million, a coupon of 11 percent, and sells of 104 percent of par. The first issue matures in 25 years, the second in 8 years.

A. What are the company’s capital structures weights on book values basis?

B. What are the company’s capital structure weights on a market value basis?

C. Which are more relevant, the book or market value weight?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92875953

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