Question

Filer Manufacturing has 9 million shares of common stock outstanding. The current share price is $88, and the book value per share is $7. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $80 million and a coupon rate of 5 percent and sells for 98 percent of par. The second issue has a face value of $55 million and a coupon rate of 6 percent and sells for 106 percent of par. The first issue matures in 20 years, the second in 8 years.

a.	What are the company’s capital structure weights on a book value basis? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).)

Equity/Value
Debt/Value

b.	What are the company’s capital structure weights on a market value basis? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).)

Equity/Value
Debt/Value

c.	Which are more relevant, the book or market value weights?
	Market value Book value

Answer 1