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Filer Manufacturing has 7,533,244 shares of common stock outstanding
Filer Manufacturing has 7,533,244 shares of common stock outstanding. The current share price is $44.51, and the book value per share is $7.55. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $43,603,197, has a 0.07 coupon, matures in 19 years and sells for 98 percent of par. The second issue has a face value of $74,016,984, has a 0.05 coupon, matures in 18 years, and sells for 95 percent of par. What is Filer's weight of equity on a market value basis? Enter the answer with 4 decimals (e.g. 0.2345)
Filer Manufacturing has 9,752,580 shares of common stock outstanding. The current share price is $59.47, and the book value per share is $4.78. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $54,192,163, has a 0.08 coupon, matures in 7 years and sells for 94 percent of par. The second issue has a face value of $56,898,853, has a 0.05 coupon, matures in 8 years, and sells for 97 percent of par. What is Filer's weight of debt on a market value basis? Enter the answer with 4 decimals (e.g. 0.2345)
Expert Solution
Computation of Filer's Weight of Equity on a Market Value Basis:
Market Value of Equity = Number of Shares Outstanding * Current Price per Share
= 7,533,244*$44.51
Market Value of Equity = $335,304,690.44
Market Value of Debt = Market Value of First Bond Issue + Market Value of Second Bond Issue
= ($43,603,197*98%) + ($74,016,984*95%)
= $42,731,133.06 + $70,316,134.80
Market Value of Debt = $113,047,267.86
Market Value of Firm = Market Value of Equity+Market Value of Debt = $335,304,690.44+$113,047,267.86 = $448,351,958.30
Weight of Equity = Market Value of Equity / Market Value of Firm = $335,304,690.44/$448,351,958.30 = 74.79%
Computation of Filer's Weight of Debt on a Market Value Basis:
Market Value of Equity = Number of Shares Outstanding * Current Price per Share
= 9,752,580*$59.47
Market Value of Equity = $579,985,932.60
Market Value of Debt = Market Value of First Bond Issue + Market Value of Second Bond Issue
= ($54,192,163*94%) + ($56,898,853*97%)
= $50,940,633.22 + $55,191,887.41
Market Value of Debt = $106,132,520.63
Market Value of Firm = Market Value of Equity+Market Value of Debt = $579,985,932.60 +$106,132,520.63 = $686,118,453.23
Market Value of Debt = Market Value of Debt / Market Value of Firm = $106,132,520.63/$686,118,453.23 = 15.47%
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