Book value versus market value filer manufacturing

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Reference no: EM131052354

Book Value versus Market Value Filer Manufacturing has 8.3 million shares of common stock outstanding. The current share price is S53, and the book value per share is $4. The company also has two bond issues outstanding. The first bond issue has a face value of S70 million and a coupon rate of 7 percent and sells for 108.3 percent of par. The second issue has a face value of $60 million and a coupon rate of 7.5 percent and sells for 108.9 percent of par. The first issue matures in 8 years, the second in 27 years. a. What are the company's capital structure weights on a book value 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 weights? Why? Calculating the WACC In the previous problem, suppose the company's stock has a beta of 1.15. The risk-lav rate? 3.7 percent, and the market risk premium is 7 percent. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issue Is make semiannual payments. The tax rate is vent. What is the company'- -WACC?

Reference no: EM131052354

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