Final answer:
The market value of Book Co.'s equity is $77.61 million, and the market value of its debt is $19.9 million. The weights for computing its WACC are 79.52% equity and 20.48% debt.
Step-by-step explanation:
To calculate the market value of Book Co.'s equity, we need to multiply the number of shares of common stock by the market price per share. Book Co. has 1.5 million shares of common stock, and each share is trading at $51.74. Therefore, the market value of its equity is 1.5 million * $51.74 = $77.61 million.
To calculate the market value of Book Co.'s debt, we need to multiply the par value of the debt by the trading price as a percentage of par. Book Co. has debt with a par value of $19.1 million, and it is trading at 104% of par. Therefore, the market value of its debt is $19.1 million * 104% = $19.9 million.
To compute the weights for Book Co.'s WACC, we need to calculate the proportion of equity and debt in its capital structure. The weight of equity is the market value of equity divided by the sum of the market value of equity and debt. The weight of debt is the market value of debt divided by the sum of the market value of equity and debt. Therefore, the weights for the WACC calculation are: Weight of equity = $77.61 million / ($77.61 million + $19.9 million) = 0.7952 (or 79.52%) and Weight of debt = $19.9 million / ($77.61 million + $19.9 million) = 0.2048 (or 20.48%).