Filer Manufacturing has 10.1 million shares of common stock outstanding. The cur
ID: 2524775 • Letter: F
Question
Filer Manufacturing has 10.1 million shares of common stock outstanding. The current share price is $51, and the book value per share is $3. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $83 million, has a 8 percent coupon, and sells for 91 percent of par. The second issue has a face value of $62.62 million, has a 8 percent coupon, and sells for 95.1 percent of par. The first issue matures in 9 years, the second in 6 years.
What is Filer's capital structure weight of equity on a book value basis? (Do not round your intermediate calculations.)
0.1808
0.1636
0.1722
0.1791
0.1774
What is Filer's capital structure weight of debt on a book value basis? (Do not round your intermediate calculations.)
0.8692
0.7864
0.8609
0.8278
0.8526
What is Filer's capital structure weight of equity on a market value basis? (Do not round your intermediate calculations.)
0.816
0.7922
0.7526
0.8239
0.8319
What is Filer's capital structure weight of debt on a market value basis? (Do not round your intermediate calculations.)
0.2181
0.2078
0.2161
0.214
0.1974
Filer Manufacturing has 10.1 million shares of common stock outstanding. The current share price is $51, and the book value per share is $3. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $83 million, has a 8 percent coupon, and sells for 91 percent of par. The second issue has a face value of $62.62 million, has a 8 percent coupon, and sells for 95.1 percent of par. The first issue matures in 9 years, the second in 6 years.
Explanation / Answer
Book Value
Equity = (10.10 x 3 ) = $30.30
Debt = (83 + 62.62 ) = $145.62
Total = 175.92
Market Value
Equity = (10.10 x 51 ) = $515.10
Debt = (83x0.91) +(62.62x0.951 ) = $ 135.0816
Total = $ 650.1816
(a)What is Filer's capital structure weight of equity on a book value basis?
= $30.30 / $175.92
= 0.1722
(b)What is Filer's capital structure weight of debt on a book value basis?
= $145.62 / $175.92
= 0.8278
(c)What is Filer's capital structure weight of equity on a market value basis?
= $515.10 / $650.1816
= 0.7922
(d)What is Filer's capital structure weight of debt on a market value basis?
= $135.0816 / $650.1816
= 0.2078
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