Bonaime, Inc., has 7.3 million shares of common stock
outstanding. The current share price is $62.30, and the book value
per share is $5.30. The company also has two bond issues
outstanding. The first bond issue has a face value of $71.3
million, a coupon rate of 7.3 percent, and sells for 91.5 percent
of par. The second issue has a face value of $36.3 million, a
coupon rate of 7.8 percent, and sells for 90.5 percent of par. The
first issue matures in 19 years, the second in 11 years.
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.,
32.1616.)
Book value weight of equity | |
Book value weight of debt | |
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.,
32.1616.)
Market value weight of equity | |
Market value weight of debt | |
c. Which are more relevant, the book or market
value weights?
(Click to select)Market value weightsBook value weights
Bonaime, Inc., has 7.3 million shares of common stock outstanding. The current share price is $62.30,...
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