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

60.1K

Verified Solution

Question

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 companyâ€™s capital structure weights on a book valuebasis? (Do not round intermediate calculations. Round youranswers to 4 decimal places (e.g., 32.1616).)

Â Â Equity/Value Â Â Â
Â Â Debt/Value Â Â Â

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

Â Â Â Â Equity/Value Â Â Â
Â Â Â Â Debt/Value Â Â Â

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

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Â Â Â Â Equity/Value	Â Â Â
Â Â Â Â Debt/Value	Â Â Â