Filer Manufacturing has 11.6 million shares of common stock outstanding. The cur

Question

Filer Manufacturing has 11.6 million shares of common stock outstanding. The current share price is $53, 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 $94 million, has a 7 percent coupon, and sells for 93 percent of par. The second issue has a face value of $78.88 million, has a 7 percent coupon, and sells for 95.9 percent of par. The first issue matures in 11 years, the second in 5 years.

What is Filer's capital structure weight of equity on a book value basis? (Do not round your intermediate calculations.)

What is Filer's capital structure weight of debt on a book value basis? (Do not round your intermediate calculations.)

What is Filer's capital structure weight of equity on a market value basis? (Do not round your intermediate calculations.)

What is Filer's capital structure weight of debt on a market value basis?

What is Filer's capital structure weight of equity on a book value basis? (Do not round your intermediate calculations.)

Explanation / Answer

Ans 1 Book Value of Equity No Of shares                                  116,00,000.00 Book Value Per share                                                     3.00                                  348,00,000.00 Book Value of Debt Carrying Amount of Bond(Assuming issues proceeds equals face value and the liability is held to maturity) Bond Issue 1                                  940,00,000.00 Bond Issue 2                                  788,80,000.00 Total                                1728,80,000.00 capital structure weight of equity on a book value basis                                                 0.1676 capital structure weight of Debt on a book value basis                                                 0.8324 Ans 2 Market Value of Equity No Of shares                                  116,00,000.00 Market Value Per share                                                   53.00                                6148,00,000.00 Book Value of Debt Market value of Bonds Bond Issue 1                                  874,20,000.00 Bond Issue 2                                  756,45,920.00 Total                                1630,65,920.00 capital structure weight of equity on a book value basis                                                 0.7904 capital structure weight of Debt on a book value basis                                                 0.2096

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