Problem:
Assume Company XYZ finances its capital projects using only long-term debt and common equity. Consequently, its capital structure consists of only long-term debt and common equity. If XYZ's market value of equity exceeds its book value and its bonds sell at par value, its market-based capital structure has a higher percentage of debt than the capital structure calculated using its accounting-based values.
Note: Provide thorough explanation of every question given in the problem.