Filer Manufacturing has 11.6 million shares of common stock outstanding. The cur
ID: 2728715 • Letter: F
Question
Filer Manufacturing has 11.6 million shares of common stock outstanding. The current share price is $50, and the book value per share is $6. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $97 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 97.4 percent of par. The first issue matures in 11 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.)
0.2949
0.2693
0.292
0.2835
0.2977
What is Filer's capital structure weight of debt on a book value basis? (Do not round your intermediate calculations.)
0.7165
0.7523
0.7451
0.6807
0.738
What is Filer's capital structure weight of equity on a market value basis? (Do not round your intermediate calculations.)
0.7376
0.8075
0.8152
0.7997
0.7764
What is Filer's capital structure weight of debt on a market value basis? (Do not round your intermediate calculations.)
0.2124
0.2348
0.2325
0.2236
0.2303
Filer Manufacturing has 11.6 million shares of common stock outstanding. The current share price is $50, and the book value per share is $6. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $97 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 97.4 percent of par. The first issue matures in 11 years, the second in 6 years.
Explanation / Answer
capital structure weight of equity on a book value basis
Book value of common equity shares =69.6 million
Book value of debt =$175.88 millions(97+78.88)
Total book value of capital structure =245.48
capital structure weight of equity on a book value basis=.2835(69.6/245.48)
B)capital structure weight of debt on a book value basis=.7165(1-.2835)
Requirement 2
A)
capital structure weight of equity on amarket value basis
Market value of common equity shares =589 million
Market value of debt =$167.04 millions(97*93%+78.88*97.4%)
Total market value of capital structure =747.04 million
capital structure weight of equity on a market value basis=.7764(580/747.04)
B)capital structure weight of debt on a market value basis=0.2236(1-.7764)
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