Question

Hero Manufacturing 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, both with semiannual coupons. The first bond issue has a face value $80 million and a coupon of 9 percent and sells for 95 percent of par. The second issue has a face value of $60 million and a coupon of 10 percent and sells for 108 percent of par. The first issue matures in 24 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 and round your answers to 4 decimal places, e.g., .1616.)
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., .1616.)

Answer 1