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Hero Manufacturing has 5 million shares of common stock outstanding. The current share price is $84 and the book value per share is $7. The company also has two bond issues outstanding, both with semiannual coupons. The first bond issue has a face value $60 million and a coupon of 7 percent and sells for 94 percent of par. The second issue has a face value of $35 million and a coupon of 8 percent and sells for 107 percent of par. The first issue matures in 22 years, the second in 4 years. a. What are the company's capital structure weights on a book value basis

Sagot :

gagemcculley

Answer:

The company's capital structure weights on a book value basis are:

a. 28.57% for equity, and

b. 71.43% for debt.

Explanation:

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