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 $48, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $71 million, has a 7 percent coupon, and sells for 97 percent of par. The second issue has a face value of $52.46 million, has a 7 percent coupon, and sells for 101 percent of par. The first issue matures in 9 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.)

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? (Do not round your intermediate calculations.)

Filer Manufacturing has 8.6 million shares of common stock outstanding. The current share price is $48, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $71 million, has a 7 percent coupon, and sells for 97 percent of par. The second issue has a face value of $52.46 million, has a 7 percent coupon, and sells for 101 percent of par. The first issue matures in 9 years, the second in 6 years.

Explanation / Answer

= (book value of equity*shares o/s)/( book value of equity*shares o/s+FV bond 1+FV Bond 2)

=(8.6*4)/(8.6*4+71+52.46)

=0.22

= (market value of equity*shares o/s)/( market value of equity*shares o/s+FV bond 1*percent of par+FV Bond 2*percent of par)

=(8.6*48)/(8.6*48+71*0.97+52.46*1.01)

=0.77

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