Market Value Capital StructureSuppose the Schoof Company has this book value balance sheet: Current assets $30,000,000 Current liabilities $20,000,000 Notes payable 10,000,000Fixed assets 70,000,000 Long-term debt 30,000,000 Common stock (1 million shares) 1,000,000 Retained earnings 39,000,000Total assets $100,000,000 Total liabilities and equity $100,000,000 The notes payable are to banks, and the interest rate on this debt is 11%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the company's permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of $1,000, an annual coupon interest rate of 7%, and a 20-year maturity. The going rate of interest on new long-term debt, rd, is 10%, and this is the present yield to maturity on the bonds. The common stock sells at a price of $62 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places. Short-term debt $ %Long-term debt Common equity Total capital $ % Market Value Capital StructureSuppose the Schoof Company has this book value balance sheet:Current assetsFixed assetsTotal assetsShort-term debtLong-term debtCommon equityTotal capital$$30,000,000$70,000,000$100,000,000Current liabilitiesNotes payableThe notes payable are to banks, and the interest rate on this debt is 11%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the company's permanent capital structure.The long-term debt consists of 30,000 bonds, each with a par value of $1,000, an annual coupon interest rate of 7%, and a 20-year maturity. The going rate of interest on new long-term debt, rd, is 10%, and this is the present yield tomaturity on the bonds. The common stock sells at a price of $62 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentagevalues to two decimal places.Long-term debtCommon stock (1 million shares)Retained earningsTotal liabilities and equity%$20,000,00010,000,00030,000,0001,000,00039,000,000$100,000,000%

Capital -The term "capital" describes the monetary assets, such as cash, machinery, equipment, and…

he Schoof Company has this book value balance sheet: Current assets $30,000,000 Current liabilities $20,000,000 Notes payable 10,000,000 Fixed assets 70,000,000 Long-term debt 30,000,000 Common stock (1 million shares) 1,000,000 Retained earnings 39,000,000 Total assets $100,000,000 Total liabilities and equity $100,000,000 The notes payable are to banks, and the interest rate on this debt is 11%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the company's permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of $1,000, an annual coupon interest rate of 7%, and a 20-year maturity. The going rate of interest on new long-term debt, rd, is 10%, and this is the present yield to maturity on the bonds. The common stock sells at a price of $62 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places. Short-term debt $ % Long-term debt Common equity Total capital $ %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Market Value Capital Structure

Suppose the Schoof Company has this book value balance sheet:

Current assets	$30,000,000	Current liabilities	$20,000,000
		Notes payable	10,000,000
Fixed assets	70,000,000	Long-term debt	30,000,000
		Common stock (1 million shares)	1,000,000
		Retained earnings	39,000,000
Total assets	$100,000,000	Total liabilities and equity	$100,000,000

The notes payable are to banks, and the interest rate on this debt is 11%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the company's permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of $1,000, an annual coupon interest rate of 7%, and a 20-year maturity. The going rate of interest on new long-term debt, r_d, is 10%, and this is the present yield to maturity on the bonds. The common stock sells at a price of $62 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places.

Short-term debt	$	%
Long-term debt
Common equity
Total capital	$	%

Market Value Capital Structure
Suppose the Schoof Company has this book value balance sheet:
Current assets
Fixed assets
Total assets
Short-term debt
Long-term debt
Common equity
Total capital
$
$30,000,000
$
70,000,000
$100,000,000
Current liabilities
Notes payable
The notes payable are to banks, and the interest rate on this debt is 11%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the company's permanent capital structure.
The long-term debt consists of 30,000 bonds, each with a par value of $1,000, an annual coupon interest rate of 7%, and a 20-year maturity. The going rate of interest on new long-term debt, rd, is 10%, and this is the present yield to
maturity on the bonds. The common stock sells at a price of $62 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage
values to two decimal places.
Long-term debt
Common stock (1 million shares)
Retained earnings
Total liabilities and equity
%
$20,000,000
10,000,000
30,000,000
1,000,000
39,000,000
$100,000,000
%

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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