Vedder, Inc., has 6.4 million shares of common stock outstanding. The current sh
ID: 2640444 • Letter: V
Question
Vedder, Inc., has 6.4 million shares of common stock outstanding. The current share price is $61.40, and the book value per share is $4.40. Vedder also has two bond issues outstanding. The first bond issue has a face value of $70.4 million, a coupon rate of 7.4 percent, and sells for 96 percent of par. The second issue has a face value of $35.4 million, a coupon rate of 6.9 percent, and sells for 95 percent of par. The first issue matures in 18 years, the second in 10 years.
(a)
What are the companys capital structure weights on a book value basis? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).)
(b)
What are the companys capital structure weights on a market value basis? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).)
Vedder, Inc., has 6.4 million shares of common stock outstanding. The current share price is $61.40, and the book value per share is $4.40. Vedder also has two bond issues outstanding. The first bond issue has a face value of $70.4 million, a coupon rate of 7.4 percent, and sells for 96 percent of par. The second issue has a face value of $35.4 million, a coupon rate of 6.9 percent, and sells for 95 percent of par. The first issue matures in 18 years, the second in 10 years.
Explanation / Answer
A
B
Book Value of equity 6.4Million*4.40 28.16 Million Book value of debt Ist issue 70.4 2nd issue 35.4 Total 105.8 Million total value of the company 133.96 Book value weight of equity Book value of equity/Value of company 21.02% Book value weight of debt Book value ofDebt/Value of company 78.98%Related Questions
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