Filer Manufacturing has 8.6 million shares of common stock outstanding. The curr

Question

Filer Manufacturing has 8.6 million shares of common stock outstanding. The current share price is $47, and the book value per share is $5. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $75 million, has a 6 percent coupon, and sells for 96 percent of par. The second issue has a face value of $51.6 million, has a 6 percent coupon, and sells for 99.5 percent of par. The first issue matures in 11 years, the second in 7 years. Requirement 1: (a) What is Filer's capital structure weight of equity on a book value basis? (Do not round your intermediate calculations.) (b) What is Filer's capital structure weight of debt on a book value basis? (Do not round your intermediate calculations.) Requirement 2: (a) What is Filer's capital structure weight of equity on a market value basis? (Do not round your intermediate calculations.) (b) What is Filer's capital structure weight of debt on a market value basis? (Do not round your intermediate calculations.)

Explanation / Answer

Filer Manufacturing All Amounts in millions of $ (1) (a) Capital Structure Weight on a Book Value Basis Weight Equity Value = 8.6 million shares X $ 5 = $ 43 million 25.35% (b) Debt Value Bond 1 $ 75 million 74.65% Bond 2 $ 51.6 million $ 169.6 million (2) (a) Capital Structure Weight on a Market Value Basis Weight Equity Value = 8.6 million shares X $ 47 = $ 404.2 million 76.62% (b) Debt Value Bond 1 $ 72 million 23.38% Bond 2 $ 51.34 million $ 527.54 million

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.