Filer Manufacturing has 7 million shares of common stock outstanding. The current share price is $86, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value $70 million, a coupon of 9 percent, and sells for 96 percent of par. The second issue has a face value of $45 million, a coupon of 10 percent, and sells for 104 percent of par. The first issue matures in 24 years, the second in 6 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