Capital structure weights on a market value basis

Assignment Help Financial Management
Reference no: EM131063368

Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $79, 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 $70 million, a coupon of 8 percent, and sells for 94 percent of par. The second issue has a face value of $40 million, a coupon of 9 percent, and sells for 107 percent of par. The first issue matures in 23 years, the second in 6 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 ?

Reference no: EM131063368

Questions Cloud

Five global or regional trends that influence china : What are five global or regional trends that influence China? How do these trends affect marketing, finance, value chain, human resources, and economics, within China?
Explain the importance of these substances : you will have a conversation where you will translate the medical jargon for a patient. You will interpret his cholesterol panel, explain the importance of these substances and give advice on his lifestyle
Calculated that the degree of operating leverage : At an output level of 16,500 units, you have calculated that the degree of operating leverage is 2.80. The operating cash flow is $63,500 in this case. Ignore the effect of taxes. What will be the new degree of operating leverage for output levels of..
Assignment-global staffing : Every company finds it challenging to recruit and select top executives for an international location. The nationals of the host country will be aware of the local laws and customs and may accept a lower wage as well, but may not be familiar with ..
Capital structure weights on a market value basis : Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $79, and the book value per share is $6. The company also has two bond issues outstanding. What are the company's capital structure weights on a book value ba..
Describe one tactical and one strategic intervention : Describe one tactical and one strategic intervention that you believe to be critical to managing the implementation of organizational or systemic change. Why are these interventions important to consider when implementing change?
What dividend payout ratio was assumed in this calculation : Broxholme Industries has sales of $40 million, equity totaling $27.5 million, and an ROS of 12%. The sustainable growth rate has been calculated at 14.5%. What dividend payout ratio was assumed in this calculation?
Pretax cost of debt and aftertax cost of debt : Drogo, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 16 years to maturity that is quoted at 105 percent of face value. The issue makes semiannual payments and has an embedded cost of 10 percent annually. Wh..
Management by wandering around : Name the person who coined the term "Management by Wandering Around (Walking About)", and popularly known as MBWA?

Reviews

Write a Review

 

Financial Management Questions & Answers

  How much total direct labor cost is incurred in june

Prepare the journal entry to reflect the initial $86,000 investment and evaluate the three proposals for expansion, providing the pros and cons of each option.

  Estimate of the the call options value

You are attempting to value a call option with an exercise price of $150 and one year to expiration. The underlying stock pays no dividends, its current price is $150, and you believe it has a 50% chance of increasing to $180 and a 50% chance of decr..

  Coin collection contains

Your coin collection contains 52 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2062, assuming they appreciate at an annual rate of 4.3 perce..

  What are the basic elements of a subscriber model

What is Netflix’s long-run objective? How does Netflix plan to achieve its long-run objective? How would you assess Netflix’s business model. Why does McCarthy use a subscriber model to forecast Netflix’s future cash flow requirements? What are the b..

  Historical returns-expected and required rates of return

Historical Returns: expected and Required Rates of Return You have observed the following returns over time: Assume that the risk-free rate is 5% and the market risk premium is 6%. Do not round intermediate calculations. What is the beta of Stock X?

  Differentiate between primary and secondary markets.

Describe the role of the financial institutions and financial markets in our economy

  What coupon interest rate must the company set on the bonds

Preissle Company, wants to sell some 20-year, annual interest, $1,000 par value bonds. Its stock sells for $42 per share, and each bond would have 75 warrants attached to it, each exercisable into one share of stock at an exercise price of $47. The f..

  What is this projects equivalent annual cost or eac

A five-year project has an initial fixed asset investment of $340,000, an initial NWC investment of $36,000, and an annual OCF of −$35,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..

  Cost of equity capital with the new capital structure

The company has zero debt in its capital structure. Its overall cost of capital is 9%. The firm is considering a new capital structure with 50% debt. The interest rate on the debt would be 4%. Assuming that the corporate tax rate is 34%, what would b..

  What is the projects net present value if the tax rate

A project has an initial requirement of $89,218 for equipment. The equipment will be depreciated to a zero book value over the 5-year life of the project. The investment in net working capital will be $21,134. All of the net working capital will be r..

  Identified an investment project with the cash flow

Havana, Inc., has identified an investment project with the following cash flows. Assume the discount rate is 6 percent, what is the future value of these cash flows in Year 4?  What is the future value at an interest rate of 14 percent?

  Manufacturing of wide range of consumer products

Carlyle Chemicals is evaluating a new chemical compound used in the manufacturing of a wide range of consumer products. The firm is concerned that inflation in the cost of raw materials will have an adverse effect on the projects cash flows. what rec..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd