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Ten Pins Manufacturing has 5 million shares of common stock outstanding. The current share price is $71, and the book value per share is $6. The company also has two bond issues outstanding. The first bond issue has a face value of $65 million and a coupon rate of 6 percent and sells for 96 percent of par. The second issue has a face value of $45 million and a coupon rate of 7 percent and sells for 105 percent of par. The first issue matures in 21 years, the second in 5 years. a. What are the company’s capital structure weights 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? Market value Book value.

Financial Management, Finance

  • Category:- Financial Management
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