Regions, Inc., has 7.8 million shares of common stock outstanding. The current s
ID: 2629486 • Letter: R
Question
Regions, Inc., has 7.8 million shares of common stock outstanding. The current share price is $62.80, and the book value per share is $5.8. Regions also has two bond issues outstanding. The first bond issue has a face value of $71.8 million, a 7.3 percent coupon, and sells for 89.0 percent of par. The second issue has a face value of $36.8 million, a 8.3 percent coupon, and sells for 88.0 percent of par. The first issue matures in 19 years, the second in 11 years.
(a)
What are the company
Regions, Inc., has 7.8 million shares of common stock outstanding. The current share price is $62.80, and the book value per share is $5.8. Regions also has two bond issues outstanding. The first bond issue has a face value of $71.8 million, a 7.3 percent coupon, and sells for 89.0 percent of par. The second issue has a face value of $36.8 million, a 8.3 percent coupon, and sells for 88.0 percent of par. The first issue matures in 19 years, the second in 11 years.
Explanation / Answer
Book Value Weights:
Equity = 45.24(7.8*5.8) Million =
Debt1 = 71.8, Debt2 = 36.8 , Total Debt = 71.8 + 36.8 = 108.6 Million
Weights = Equity = 29.41, debt= 70.59
Market Value weights:
Equity = 7.8*62.80 = 489.84 million'
Debt1 = 71.8 * 89 % = 63.90, Debt2 = 36.8*88%=32.38. Total debt = 96.28
Weights: Equity = 83.57, dEbt = 16.43
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