CORPORATE FINANCE--CONNECT ACCESS CARD
CORPORATE FINANCE--CONNECT ACCESS CARD
12th Edition
ISBN: 9781264331062
Author: Ross
Publisher: MCG CUSTOM
Question
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Chapter 13, Problem 8QAP

a

Summary Introduction

Adequate information:

Common stock outstanding SO = 7,600,000

Book value per share BVS = $4

Book value of Bond I BVBI = $80,000,000

Coupon rate of Bond I CRBI = 6.80%

Face value of Bond I FVBI = $1,000

Selling rate of Bond I RBI = 109.5%

Price of Bond I PVBI = $1,095

Term duration of Bond I TBI = 9 years

Number of compounding periods in a year NBI = 2

Book value of Bond II BVBII = $65,000,000

Coupon rate of Bond II BVBII = 7.10%

Face value of Bond II FVBII = $1,000

Selling rate of Bond II RBII = 112.4%

Price of Bond II PVBII = $1,124

Term duration of Bond II TBII = 25 years

Number of compounding periods in a year NBII = 2

To compute: Capital structure weights on book value basis

Introduction: The Capital structure weights refers to the weightage or proportion of capital sources.

b

Summary Introduction

Adequate information:

Current price per share PS = $67

Selling rate of Bond I RBI = 109.5%

Selling rate of Bond II RBII = 112.4%

To compute: Capital structure weights on market value basis

Introduction: The Capital structure weights refers to the weightage or proportion of capital sources.

c

Summary Introduction

To compute: The more relevant between book value or market value weights

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