Business
Business, 03.12.2019 22:31, jaylaa04

3.4 million shares of common stock outstanding. the current share price is $84.50, and the book value per share is $8.75. the company also has two bond issues outstanding. the first bond issue has a face value of $71 million, a coupon rate of 5.1 percent, and sells for 95.5 percent of par. the second issue has a face value of $43 million, a coupon rate of 5.7 percent, and sells for 104.5 percent of par. the first issue matures in 21 years, the second in 9 years. the most recent dividend was $3.98 and the dividend growth rate is 4.1 percent. assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. both bonds make semiannual payments. the tax rate is 21 percent.

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., .1616.)
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., .1616.)
c. which are more relevant, the book or market value weights?

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3.4 million shares of common stock outstanding. the current share price is $84.50, and the book valu...

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