Masterson, Inc., has 4.4 million shares of common stock outstanding. The current share price is $89.50, and the book value per share is $11.25. The company also has two bond issues outstanding. The first bond issue has a face value of $81 million, a coupon rate of 5.1%, and sells for 96.5% of par. The second issue has a face value of $53 million, a coupon rate of 5.8%, and sells for 106.5% of par. The first issue matures in 25 years, the second in 9 years. The most recent dividend was $4.28 and the dividend growth rate is 5.3%. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semi-annual payments. The tax rate is 21%. a. What are the company's capital structure weights on a book value basis?
b. What are the company's capital structure weights on a market value basis?
c. Which are more relevant, the book or market value weights?

Suppose a firm faces a fixed price of output, 푝푝= 1200. the firm hires workers from a union at a daily wage, 푤푤, to produce output according to the production function 푞푞= 2퐸퐸12. there are 225 workers in the union. any union worker who does not work for this firm is guaranteed to find nonunion employment at a wage of $96 per day. a.what is the firm’s labor demand function? b.if the firm is allowed to choose 푤푤, but then the union decides how many workers to provide (up to 225) at that wage, what wage will the firm set? how many workers will the union provide? what is the firm’s output and profit? what is the total income of the 225 union workers? c.now suppose that the union sets the wage, but the firm decides how many workers to hire at that wage (up to 225). what wage will the union set to maximize the total income of all 225 workers? how many workers will the firm hire? what is the firm’s output and profit? what is the total income of the 225 union workers? [hint: to maximize total income of union, take the first order condition with respect to w and set equal to 0.]