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Ten Pins Manufacturing has 8 million shares of common stock outstanding.
The current share price is $80, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value of $75 million and a coupon rate of 9 percent and sells for 95 percent of par. The second issue has a face value of $45 million and a coupon rate of 10 percent and sells for 108 percent of par. The first issue matures in 24 years, the second in 7 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
c. Which are more relevant, the book or market value weights?
– Market value
– Book value
 
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