Book value versus market value


Filer Manufacturing has 11 million shares of common stock outstanding. The current share price is $68, and the book value per share is $6. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $70 million, has a 7 percent coupon, and sells for 93 percent of par. The second issue has a face value of $55 million, has an 8 percent coupon, and sells for 104 percent of par. The first issue matures in 21 years, the second in 6 years. (Round your answers to 3 decimal places. (e.g., 32.161))

Required:

(a) On a book value basis, Filer's capital structure weights, E/V and D/V, are__ and__ respectively.

(b) On a market value basis, Filer's capital structure weights, E/V and D/V, are __and __ respectively.

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Finance Basics: Book value versus market value
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