Company capital structure weights on book value

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Reference no: EM131815298

Ten Pins Manufacturing has 6 million shares of common stock outstanding. The current share price is $85, 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 $65 million and a coupon rate of 8 percent and sells for 95 percent of par. The second issue has a face value of $40 million and a coupon rate of 9 percent and sells for 108 percent of par. The first issue matures in 23 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

Reference no: EM131815298

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