Question

Ten Pins Manufacturing has 4 million shares of common stock outstanding. The current share price is $83, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $90 million and a coupon rate of 6 percent and sells for 98 percent of par. The second issue has a face value of $60 million and a coupon rate of 7 percent and sells for 106 percent of par. The first issue matures in 21 years, the second in 3 years.

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

Answer 1

The answer for above problem is explained below