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Filer Manufacturing has 9 million shares of common stock outstanding. The current share price is $81,...

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Finance

Filer Manufacturing has 9 million shares of common stockoutstanding. The current share price is $81, and the book value pershare is $8. Filer Manufacturing also has two bond issuesoutstanding. The first bond issue has a face value of $80 millionand a coupon rate of 10 percent and sells for 96 percent of par.The second issue has a face value of $50 million and a coupon rateof 11 percent and sells for 104 percent of par. The first issuematures in 25 years, the second in 8 years.


a.

What are the company’s capital structure weights on a book valuebasis? (Do not round intermediate calculations. Round youranswers to 4 decimal places (e.g., 32.1616).)


  Equity/Value   
  Debt/Value   


b.

What are the company’s capital structure weights on a marketvalue basis? (Do not round intermediate calculations. Roundyour answers to 4 decimal places (e.g., 32.1616).)


    Equity/Value   
    Debt/Value   


c.

Which are more relevant, the book or market value weights?

Answer & Explanation Solved by verified expert
4.0 Ratings (667 Votes)
a BV of equityPrice of equitynumber of shares outstanding BV of equity89000000 72000000 BV of Bond1Par valuebonds outstandingage of par BV of Bond11000800001 80000000 BV of Bond2Par valuebonds    See Answer
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