Question

Dinklage Corp. has 8.1 million shares of common stock outstanding. The current share price is $47,...

Dinklage Corp. has 8.1 million shares of common stock outstanding. The current share price is $47, 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 $70 million, has a 7 percent coupon, and sells for 94 percent of par. The second issue has a face value of $54.27 million, has a 7 percent coupon, and sells for 98 percent of par. The first issue matures in 11 years, the second in 6 years.

What is the company's capital structure weight of equity on a book value basis?

What is the company's capital structure weight of debt on a book value basis?

Homework Answers

Answer #1

Book value of Equity = Shares Outstanding * Book value per share

= 8,100,000 * $5

= $40,500,000

Book value of first bond issue = $70,000,000

Book value of second bond issue = $54,270,000

Total Book Value = Book value of Equity + Book value of first bond issue + Book value of second bond issue

= $40,500,000 + $70,000,000 + $54,270,000

= $164,770,000

Weight of Equity = Book value of Equity / Total Book Value

= $40,500,000 / $164,770,000

= 0.245797

= 24.58%

Wight of Debt = (Book value of First and second bonds issue) / Total Book value

= ($70,000,000 + $54,270,000) / $164,770,000

= $124,270,000 / $164,770,000

= 0.754203

= 75.42%

Weight of Equity on book value based capital structure is 24.58%

Weight of Debt on book value based capital structure is 75.42%

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Dinklage Corp. has 8.1 million shares of common stock outstanding. The current share price is $57,...
Dinklage Corp. has 8.1 million shares of common stock outstanding. The current share price is $57, and the book value per share is $6. The company also has two bond issues outstanding. The first bond issue has a face value of $68 million, has a 9 percent coupon, and sells for 95 percent of par. The second issue has a face value of $55.08 million, has a 9 percent coupon, and sells for 99.1 percent of par. The first issue...
Dinklage Corp. has 10.1 million shares of common stock outstanding. The current share price is $53,...
Dinklage Corp. has 10.1 million shares of common stock outstanding. The current share price is $53, 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 $81 million, has a 7 percent coupon, and sells for 92 percent of par. The second issue has a face value of $56.56 million, has a 7 percent coupon, and sells for 96.2 percent of par. The first issue...
Dinklage Corp. has 9.1 million shares of common stock outstanding. The current share price is $51,...
Dinklage Corp. has 9.1 million shares of common stock outstanding. The current share price is $51, and the book value per share is $4. The company also has two bond issues outstanding. The first bond issue has a face value of $79 million, has a 7 percent coupon, and sells for 91 percent of par. The second issue has a face value of $64.61 million, has a 7 percent coupon, and sells for 95.1 percent of par. The first issue...
Dinklage Corp. has 10.6 million shares of common stock outstanding. The current share price is $59,...
Dinklage Corp. has 10.6 million shares of common stock outstanding. The current share price is $59, and the book value per share is $6. The company also has two bond issues outstanding. The first bond issue has a face value of $81 million, has a 7 percent coupon, and sells for 92 percent of par. The second issue has a face value of $58.3 million, has a 7 percent coupon, and sells for 95.1 percent of par. The first issue...
Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $68,...
Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $68, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, a coupon rate of 6 percent, and sells for 97 percent of par. The second issue has a face value of $40 million, a coupon rate of 6.5 percent, and sells for 108 percent of par. The...
Dinklage Corp. has 5 million shares of common stock outstanding. The current share price is $71,...
Dinklage Corp. has 5 million shares of common stock outstanding. The current share price is $71, and the book value per share is $6. The company also has two bond issues outstanding. The first bond issue has a face value of $65 million, a coupon of 6 percent, and sells for 96 percent of par. The second issue has a face value of $45 million, a coupon of 7 percent, and sells for 105 percent of par. The first issue...
Dinklage Corp. has 6 million shares of common stock outstanding. The current share price is $78,...
Dinklage Corp. has 6 million shares of common stock outstanding. The current share price is $78, 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 $65 million, a coupon of 7 percent, and sells for 98 percent of par. The second issue has a face value of $35 million, a coupon of 8 percent, and sells for 106 percent of par. The first issue...
Dinklage Corp. has 9 million shares of common stock outstanding. The current share price is $81,...
Dinklage Corp. has 9 million shares of common stock outstanding. The current share price is $81, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $80 million, a coupon of 10 percent, and sells for 96 percent of par. The second issue has a face value of $50 million, a coupon of 11 percent, and sells for 104 percent of par. The first issue...
Dinklage Corp. has 8 million shares of common stock outstanding. The current share price is $74,...
Dinklage Corp. has 8 million shares of common stock outstanding. The current share price is $74, 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 $80 million, a coupon of 9 percent, and sells for 95 percent of par. The second issue has a face value of $60 million, a coupon of 10 percent, and sells for 108 percent of par. The first issue...
Dinklage Corp. has 4 million shares of common stock outstanding. The current share price is $70,...
Dinklage Corp. 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, a coupon of 5 percent, and sells for 95 percent of par. The second issue has a face value of $40 million, a coupon of 6 percent, and sells for 104 percent of par. The first issue...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT