Vedder, Inc., has 7.2 million shares of common stock outstanding. The current share price is $62.20, and the book value per share is $5.20. Vedder also has two bond issues outstanding. The first bond issue has a face value of $71.2 million, a coupon rate of 7.2 percent, and sells for 92 percent of par. The second issue has a face value of $36.2 million, a coupon rate of 7.7 percent, and sells for 91 percent of par. The first issue matures in 22 years, the second in 14 years.
a.) What are the companyâs capital structure weights on a book value basis? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).)
b.) What are the companyâs capital structure weights on a market value basis? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).)
Vedder, Inc., has 7.2 million shares of common stock outstanding. The current share price is $62.20, and the book value per share is $5.20. Vedder also has two bond issues outstanding. The first bond issue has a face value of $71.2 million, a coupon rate of 7.2 percent, and sells for 92 percent of par. The second issue has a face value of $36.2 million, a coupon rate of 7.7 percent, and sells for 91 percent of par. The first issue matures in 22 years, the second in 14 years.
a.) What are the companyâs capital structure weights on a book value basis? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).)
b.) What are the companyâs capital structure weights on a market value basis? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).)
Related questions
Bonaime, Inc., has 7.1 million shares of common stock outstanding. The current share price is $62.10, and the book value per share is $5.10. The company also has two bond issues outstanding. The first bond issue has a face value of $71.1 million, a coupon rate of 7.1 percent, and sells for 92.5 percent of par. The second issue has a face value of $36.1 million, a coupon rate of 7.6 percent, and sells for 91.5 percent of par. The first issue matures in 21 years, the second in 13 years.
a. What are the companyâs 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.)
| Book value weight of equity | |
| Book value weight of debt | |
| | |
b. What are the companyâs 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.)
| Market value weight of equity | |
| Market value weight of debt | |
| | |
c. Which are more relevant, the book or market value weights?
| 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 issue has a face value of $50 million, a coupon of 11 percent, and sells for 104 percent of par. The first issue matures in 25 years, the second in 8 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 companyâs 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 | |
