In March of 2016 the capital structure of IT solutions (measured in market values) appears as follows:
Thousands of dollars
Book Value
Market Value
Accounts Payable
50,000
50,000
Common Equity
500,000
750,000
Long-Term Debt
600,000
600,000
Total assets
1,150,000
1,400,000
Calculate the appropriate weights of debt and equity in the capital structure of the company?
Companyâs common stock currently sells $12.00 per share. The firm pays dividends annually and expects dividends to grow at a constant rate of 3% indefinitely. The most recent annual dividend per share, paid yesterday, is $1.00. Calculate the cost of common equity?
In March of 2016 the capital structure of IT solutions (measured in market values) appears as follows:
| Thousands of dollars | Book Value | Market Value |
| Accounts Payable | 50,000 | 50,000 |
| Common Equity | 500,000 | 750,000 |
| Long-Term Debt | 600,000 | 600,000 |
| Total assets | 1,150,000 | 1,400,000 |
Calculate the appropriate weights of debt and equity in the capital structure of the company?
Companyâs common stock currently sells $12.00 per share. The firm pays dividends annually and expects dividends to grow at a constant rate of 3% indefinitely. The most recent annual dividend per share, paid yesterday, is $1.00. Calculate the cost of common equity?
Related questions
Bonaime, Inc., has 6.8 million shares of common stock outstanding. The current share price is $61.80, and the book value per share is $4.80. The company also has two bond issues outstanding. The first bond issue has a face value of $70.8 million, a coupon rate of 7.3 percent, and sells for 94 percent of par. The second issue has a face value of $35.8 million, a coupon rate of 7.3 percent, and sells for 93 percent of par. The first issue matures in 19 years, the second in 11 years.
a. What are the companyâs capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
| Book value weight of equity??? | |
| Book value weight of debt??? | |
b. What are the companyâs capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
| Market value weight of equity??? | |
| Market value weight of debt??? | |
c. Which are more relevant, the book or market value weights?
(Click to select) Market value weights or Book value weights???
Bonaime, Inc., has 7.1 million shares of common stock outstanding. The current share price is $62.10, and the book value per share is $5.10. The company also has two bond issues outstanding. The first bond issue has a face value of $71.1 million, a coupon rate of 7.1 percent, and sells for 92.5 percent of par. The second issue has a face value of $36.1 million, a coupon rate of 7.6 percent, and sells for 91.5 percent of par. The first issue matures in 21 years, the second in 13 years.
a. What are the companyâs capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
| Book value weight of equity | |
| Book value weight of debt | |
| | |
b. What are the companyâs capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
| Market value weight of equity | |
| Market value weight of debt | |
| | |
c. Which are more relevant, the book or market value weights?
