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Book Value versus Market Value for WACC

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I was able to calculate part a, book value, but cannot figure out part b, market value. Please help. Also, do you have any advice for the answer to part c? *** See attached spreadsheet.

Thanks,

Filer Manufacturing has 8.5 million shares of common stock outstanding. The current share price is $55, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $74 million, a 6 percent coupon, and sells for 90 percent of par. The second issue has a face value of $48.45 million, a 5.3 percent coupon, and sells for 92.6 percent of par. The first issue matures in 11 years, the second in 5 years. (Round answers to 4 decimal places.)

a. On a book value basis, Filer's capital structure weights, E/V and D/V, are_______ and________ , respectively.

b. On a market value basis, Filer's capital structure weights, E/V and D/V, are _______ and _________, respectively.

c. Are the book value or market value weights more relevant. Why?

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a. .2173 and .7827

b. .8075 and .1925

c. Market value weights are ...

Solution Summary

This compares the Book Value versus Market Value for WACC

$2.19