Question: Problem 12-11 Book Value versus Market Value [LO4) Masterson, Inc., has 8 million shares of common stock outstanding. The current share price is $80, and
Problem 12-11 Book Value versus Market Value [LO4) Masterson, Inc., has 8 million shares of common stock outstanding. The current share price is $80, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $125 million, has a coupon rate of 5 percent, and sells for 91 percent of par. The second Issue has a face value of $110 million, has a coupon rate of 4 percent, and sells for 106 percent of par. The first issue matures in 23 years, the second in 9 years. Both bonds make semiannual coupon payments. ok t 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., .1616.) 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., 1616.) c. Which are more relevant, the book or market value weights? hces a. EquityValue Debt/Value b. Equity/Value Debt/Value c. More relevant
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