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nasty-shy [4]
3 years ago
12

Dinklage Corp. has 4 million shares of common stock outstanding. The current share price is $83, 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 $90 million, a coupon of 6 percent, and sells for 98 percent of par. The second issue has a face value of $60 million, a coupon of 7 percent, and sells for 106 percent of par. The first issue matures in 21 years, the second in 3 years. a. What are the company's capital structure weights on a book value basis? Equity/Value= Debt/Value=
Business
1 answer:
olchik [2.2K]3 years ago
4 0

Answer:

0.175824; 0.8242

Explanation:

Equity 1 = Shares of common stock outstanding × Book value per share

             = 4,000,000 × $8

             = $32,000,000

Debt 1 = $90,000,000

Debt 2 = $60,000,000

Total value = Equity 1 + Debt 1 + Debt 2

                  = $32,000,000 + $90,000,000 + $60,000,000

                  = $182,000,000

Weight of equity 1:

= Equity 1 ÷ Total value

= $32,000,000 ÷ $182,000,000

= 0.175824

Weight of debt 1:

= Debt 1 ÷ Total value

= $90,000,000 ÷ $182,000,000

= 0.494505

Weight of debt 2:

= Debt 1 ÷ Total value

= $60,000,000 ÷ $182,000,000

= 0.32967

Equity/Value = 0.175824

Debt/Value = Weight of debt 1 + Weight of debt 2

                    =  0.494505 + 0.32967

                    = 0.8242

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Answer:

C) 0.5 USD

Explanation:

Swap is an arrangement in which two parties exchange their interest rates for mutual benefit. One party may receive fixed rate and other will receive floating rate based on LIBOR. In the given scenario the swap agreement was originated when the LIBIOR was 3%. The fixed rate was set to be at 4% so the net gain at the time of inception was 1%. When LIBOR increased after six month the net gain declined to only 0.5%.

4 0
2 years ago
Goodell Corporation just paid its annual dividend of $1.75, today. Dividends for the Goodell Corporation are expected to increas
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Answer:

current price of Goodell Corporation stock is $48.26

Explanation:

given data

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required rate of return = 10 percent

solution

we get here first dividend that is

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4 0
2 years ago
1.2 Explain the concept of the labour market to a Grade 12 school-leaver. Give a
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Answer:

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Being educated gives an employee the capacity to be more productive and gives an indication of the potential of prospective employees to recruiters and employers. Therefore, qualifications attained are an advantage when seeking employment alongside many several other job seekers

Therefore, a grade 12 school-leaver competing for a job alongside several others with similar or tertiary education is less likely to secure a desired job or vocation

However, with a tertiary education, such job seekers would more readily convince recruiters about their ability to satisfactorily perform their desired job

Explanation:

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