Dinklage Corp. has 10 million shares of common stock outstanding. The current sh
ID: 2749692 • Letter: D
Question
Dinklage Corp. has 10 million shares of common stock outstanding. The current share price is $82, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value of $85 million, a coupon of 5 percent, and sells for 97 percent of par. The second issue has a face value of $55 million, a coupon of 6 percent, and sells for 105 percent of par. The first issue matures in 20 years, the second in 9 years.
What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
Equity/Value=
Debt/Value=
What are the company’s capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
Equity/Value=
Debt/Value=
a.What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
Equity/Value=
Debt/Value=
b.What are the company’s capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
Equity/Value=
Debt/Value=
Explanation / Answer
Market value Weights Equity $ 820,000,000.00 0.8540 10000000*82 Debt $ 140,200,000.00 0.1460 85000000*97%+55000000*105% $ 960,200,000.00 1.0000 Book value Weights Equity $ 50,000,000.00 0.2632 10000000*5 Debt $ 140,000,000.00 0.7368 85000000+55000000 $ 190,000,000.00 1.0000