Filer Manufacturing has 6 million shares of common stock outstanding. The current share price is $78, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value $65 million, a coupon of 7 percent, and sells for 98 percent of par. The second issue has a face value of $35 million, a coupon of 8 percent, and sells for 106 percent of par. The first issue matures in 22 years, the second in 5 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?
Market value weights
Book value weights