Dinklage Corp. has 8 million shares of common stock outstanding. The current share price is $74,...

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Dinklage Corp. has 8 million shares of common stock outstanding.The current share price is $74, and the book value per share is $7.The company also has two bond issues outstanding. The first bondissue has a face value of $95 million, a coupon rate of 7 percent,and sells for 97 percent of par. The second issue has a face valueof $80 million, a coupon rate of 6 percent, and sells for 109percent of par. The first issue matures in 23 years, the second in6 years. Both bonds make semiannual coupon payments.

a.

What are the company's capital structure weights on a book valuebasis? (Do not round intermediate calculations and roundyour answers to 4 decimal places, e.g., .1616.)

b.What are the company’s capital structure weights on a marketvalue basis? (Do not round intermediate calculations andround your answers to 4 decimal places, e.g., .1616.)

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3.9 Ratings (498 Votes)
1st Issue of Bonds Book Value 95000000 Market Value 97 95000000 Market Value 92150000 2nd Issue of Bonds Book Value 80000000 Market Value 109 80000000 Market Value 87200000 Equity Number of shares outstanding 8000000 Book Value per share 700 Market Price per share 74 Book Value of Equity Number of shares outstanding Book    See Answer
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Dinklage Corp. has 8 million shares of common stock outstanding.The current share price is $74, and the book value per share is $7.The company also has two bond issues outstanding. The first bondissue has a face value of $95 million, a coupon rate of 7 percent,and sells for 97 percent of par. The second issue has a face valueof $80 million, a coupon rate of 6 percent, and sells for 109percent of par. The first issue matures in 23 years, the second in6 years. Both bonds make semiannual coupon payments.a.What are the company's capital structure weights on a book valuebasis? (Do not round intermediate calculations and roundyour answers to 4 decimal places, e.g., .1616.)b.What are the company’s capital structure weights on a marketvalue basis? (Do not round intermediate calculations andround your answers to 4 decimal places, e.g., .1616.)

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