Company capital structure weights on book value basis

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Filer Manufacturing has 5 million shares of common stock outstanding. The current share price is $77, and the book value per share is $8. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $60 million and a coupon rate of 6 percent and sells for 97 percent of par. The second issue has a face value of $30 million and a coupon rate of 7 percent and sells for 105 percent of par. The first issue matures in 21 years, the second in 4 years.

a. What are the company’s capital structure weights on a book value basis? (Do not round intermediate calculations. 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. 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: EM131844368

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