Vedder, Inc., has 6.5 million shares of common stock outstanding. The current sh
ID: 2752925 • Letter: V
Question
Vedder, Inc., has 6.5 million shares of common stock outstanding. The current share price is $61.50, and the book value per share is $4.50. Vedder also has two bond issues outstanding. The first bond issue has a face value of $70.5 million, a coupon rate of 7 percent, and sells for 95.5 percent of par. The second issue has a face value of $35.5 million, a coupon rate of 7 percent, and sells for 94.5 percent of par. The first issue matures in 20 years, the second in 12 years.
Required:
(a) What are the company’s capital structure weights on a book value basis? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).)
Book value weight of equity =
Book value weight of debt =
(b) What are the company’s capital structure weights on a market value basis? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).)
Market value weight of equity =
Market value weight of debt =
Explanation / Answer
Book value
Market Value
Computation Value Weight Common stock 6500000*4.50 29250000 0.21627 Bond 106000000 106000000 0.78373 135250000Related Questions
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