Filer Manufacturing has 9.5 million shares of equity outstanding. The current share price is £53, and the book value per share is £5.

Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of £75 million and an 8 per cent coupon and sells for 93 per cent of par. The second issue has a face value of £60 million and a 7.5 per cent coupon and sells for 96.5 per cent of par. The first issue matures in 10 years, the second in 6 years.

(a) What are Filer’s capital structure weights on a book value basis?

(b) What are Filer’s capital structure weights on a market value basis?

(c) Which are more relevant, the book or market value weights? Why?