1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Zielflug [23.3K]
3 years ago
5

Hero Manufacturing has 6 million shares of common stock outstanding. The current share price is $85 and the book value per share

is $8. The company also has two bond issues outstanding, both with semiannual coupons. The first bond issue has a face value $65 million and a coupon of 8 percent and sells for 95 percent of par. The second issue has a face value of $40 million and a coupon of 9 percent and sells for 108 percent of par. The first issue matures in 23 years, the second in 5 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., .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? Market value weights Book value weights
Business
1 answer:
rusak2 [61]3 years ago
4 0

Answer:

1. Book value of equity

6 million x 8 = 48million

Book value of debt = 65 + 40 = 105 million

Total value = 105 + 48 = 153 million

Weight of equity = 48/153 = 0.3137

Weight of debt = 105/153 = 0.6863

2. Market value

= 6 million x 85 = 510million

= Market value of debt = (65m * 0.95) + (40m * 1.08)

= 61.75m + 43.2m

= 104.95million

Total value = 104.95 + 510 = 614.95million

Weight of equity on market value = 510/614.95 = 0.8293

Weight of debt on market value = 104.95/614.95 = 0.1707

3. Market value of weights are more relevant

You might be interested in
What is Bh2 x4hg plz help
BabaBlast [244]

Answer:

its a combustion

Explanation:

6 0
3 years ago
Read 2 more answers
Highland Company's standard cost is $250,000. The allowable deviation is ±10%. Its actual costs for six months are as follows Ja
Rasek [7]

Answer:

The month that is lower than the lower control limit is February ($220,000).

Explanation:

Giving the following information:

Highland Company's standard cost is $250,000.

The allowable deviation is ±10%.

Actual Fixed costs:

January $235,000

February 220,000

March 245,000

April 265,000

May 270,000

June 280,000

First, we need to calculate the lower control limit:

Lower control limit= 250,000*0.9= $225,000

The month that is lower than the lower control limit is February ($220,000).

6 0
3 years ago
__________ is made of materials that are poor conductors, such as glass, plastic, or rubber. They are used in an attempt to keep
Sergio [31]
The first line is Insulation and the second empty line is acted as an insulation 
7 0
3 years ago
Read 2 more answers
Which of the following is an economic change that can affect careers?
ArbitrLikvidat [17]

c) a big recording company buys a small independent label

It is typical in capitalistic economies for larger companies to buy out their competition, absorbing smaller companies. This kind of economic change can result in large changes in management for the smaller companies because the company that now owns them may hire or fire people based on what they feel best meets the needs of the newly acquired company.

7 0
3 years ago
If you find yourself in a situation that you think might be escalating, what should you avoid doing?
Anuta_ua [19.1K]
Hi there! The answer is C.

If you find yourself in a situation that you think might be escalation, you should avoid letting people know their issue is not part of your job. When telling people their concerns are not part of your job, it makes the chance of escalation rise.

You could try using options A, B and D in order to keep the involved people as content as possible.
5 0
2 years ago
Read 2 more answers
Other questions:
  • Money invested in a business by either the owner or investors is called:
    12·1 answer
  • Andrew is a financial planner and charges fees of 2% for every investment made. He made investments worth $500,000. What amount
    8·1 answer
  • Both buyers and sellers of a good are responsive to changes in the price of the product. An increase in the sales tax on the pro
    10·1 answer
  • Which of the following is an example of an illiquid asset?
    8·1 answer
  • What are the two main outcomes of a debt-for-nature swap?
    15·1 answer
  • .Goehler, Inc. acquires all of the voting stock of Kenneth, Inc. on January 4, 2017, at an amount in excess of Kenneth's fair va
    12·1 answer
  • A product manager is eager to develop a new product idea. To gain approval to do so, the product manager orders the research tea
    8·1 answer
  • Which of the following types of production would most likely use job-order costing? A. Construction of custom homes B. Farming C
    5·1 answer
  • Write a two page essay on politics (also this is for glassaqt)
    15·2 answers
  • If customers can see data about themselves on the business' computer system, it will enable them to ____________
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!