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Ten Pins Manufacturing has 4 million shares of common stock outstanding. The current share price is...

Ten Pins Manufacturing has 4 million shares of common stock outstanding. The current share price is $70, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value of $60 million and a coupon rate of 5 percent and sells for 95 percent of par. The second issue has a face value of $40 million and a coupon rate of 6 percent and sells for 104 percent of par. The first issue matures in 20 years, the second in 4 years.

a. What are the company’s capital structure weights on a book value basis?

b. What are the company’s capital structure weights on a market value basis?

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Answer #1

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Home nert Page Layout Formulas Data Review View dd-Ins Cut Σ AutoSum ー E ゴWrap Text aCopy в 1 프· ー· 鱼, Δ. :r-ㄧ 逻锂函Merge & Center. $, % , 弼,8 C Conditional Format CeInsert Delete Format Formatting, as Table w styles. ▼ ㆆ ▼ Sort &Find & 2 ClearFe Select Edting Format Painter Clipboard Alignment Number DP DR DS DT DU DV DW DX DY DZ EA EB 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 4 H KE CAPM UTILITY, SH BOOK VALUE BASIS BOOK VALUE PER SHARE BOOK VALUE SOURCE NUMBER WEIGHTS 20000000 16.67% EXPLANATION OF WEIGHT COMMON STOCK DV151/DV155 DEBT DEBT FIRST BOND SECOND BOND 60000000 50.00% 40000000 33.33% 120000000 100.00% DV153/DV155 DV154/DV155 FACE VALUE GIVEN FACE VALUE GIVEN MARKET VALUE BASIS MARKET VALUE PER SHARE SOURCE NUMBER MARKET VALUE WEIGHTS 70 280000000 73.96% COMMON STOCK DEBT DEBT FIRST BOND SECOND BOND 57000000 15.06% 41600000 10.99% 378600000 100.00% 40000000*104% M port future INDEX INTL CAP BUD SING PV, FV, ANNUITY DIR beta bond c cleanYIELD bond cap stru wACC | 福 130% RESI ex di㈠ rences: CF135

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