current liabilities were liquidated today, the company would receive a total of $1.25 million cash. What is the book value of Klingon's total assets today? What is the sum of the market value of NWC and the market value of fixed assets?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Market Values and Book Values [L LO1] Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $6
million. The machinery can be sold to the Romulans today for $5.4 million. Klingon's current balance sheet shows net
fixed assets of $3.5 million, current liabilities of $945,000, and net working capital of $275,000. If the current assets and
current liabilities were liquidated today, the company would receive a total of $1.25 million cash. What is the book value
of Klingon's total assets today? What is the sum of the market value of NWC and the market value of fixed assets?
Transcribed Image Text:Market Values and Book Values [L LO1] Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $6 million. The machinery can be sold to the Romulans today for $5.4 million. Klingon's current balance sheet shows net fixed assets of $3.5 million, current liabilities of $945,000, and net working capital of $275,000. If the current assets and current liabilities were liquidated today, the company would receive a total of $1.25 million cash. What is the book value of Klingon's total assets today? What is the sum of the market value of NWC and the market value of fixed assets?
12
Given Info.
Machinery Cost
6,000,000
Age
Sales Price
3 yrs
5,400,000
Net Fixed Assets
3,500,000
BV Current Liab
945,000
BV NWC
275,000
1,250,000
BV of current assets + BV of long-term assets
CA - CL = NWC
BV of Total Assets =
Find BV of current assets
BV of current assets - BV of NWC + BV of current liab
BV of current assets=
BV CA
MV NWC
BV NFA
MV NFA
10
Transcribed Image Text:12 Given Info. Machinery Cost 6,000,000 Age Sales Price 3 yrs 5,400,000 Net Fixed Assets 3,500,000 BV Current Liab 945,000 BV NWC 275,000 1,250,000 BV of current assets + BV of long-term assets CA - CL = NWC BV of Total Assets = Find BV of current assets BV of current assets - BV of NWC + BV of current liab BV of current assets= BV CA MV NWC BV NFA MV NFA 10
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