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Calculate capital structure weights

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Problem - Calculate Capital Structure Weights

Occam Industrial Machines issued 225,000 zero coupon bonds five years ago ($1,000 face value). The bonds originally had 30 years to maturity with yield to maturity of 5.2 percent. Interest rates have recently decreased, and the bonds now have a yield to maturity of 4.6 percent. If the company has a market value of equity of $120 million, what weight should it use for debt when calculating the cost of capital? Assume semiannual compounding for the bonds.

Problem - Stock Splits and Stock Dividends

Stockton Mineral Operations (SMO) currently has 540,000 shares of stock outstanding that sell for $83 per share. Assuming no market imperfections ot tax effects exist, what will the share price be after:

  1. SMO has a 5-for-3 stock split?
  2. SMO has a 15% stock dividend?
  3. SMO has a 42.5 percent stock dividend?
  4. SMO has a 4-for-7 reverse stock split?
  5. Determine the new number of shares outstanding in part (a) through (d).

Reference no: EM133275487

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