Market Value Capital StructureSuppose the Schoof Company has this book value balance sheet:Current assetsFixed assetsTotal assets$30,000,00070,000,000$100,000,000Current liabilities$20,000,000Notes payable10,000,000Long-term debt30,000,000Common stock (1 million shares)Retained earnings1,000,000Total liabilities and equity39,000,000$100,000,000The notes payable are to banks, and the interest rate on this debt is 8%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part ofthe 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. Thegoing rate of interest on new long-term debt, rd, is 12%, and this is the present yield to maturity on the bonds. The common stock sells at a price of $54 per share. Calculate the firm's marketvalue capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places.Short-term debt$Long-term debtCommon equityTotal capital$%%

Answered: Market Value Capital Structure Suppose…

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

Problem 1PS

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Hewlard Pocket’s market value balance sheet is given. Assets Liabilities and Shareholders’ Equity A. Original balance sheet Cash $ 150,000 Debt $ 0 Other assets 950,000 Equity 1,100,000 Value of firm $ 1,100,000 Value of firm $ 1,100,000 Shares outstanding = 100,000 Price per share = $1,100,000 / 100,000 = $11 Pocket needs to hold on to $84,000 of cash for a future investment. Nevertheless, it decides to pay a cash dividend of $2.30 per share and to replace cash as needed with a new issue of shares. After the dividend is paid and the new stock is issued: a. What will be the price per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be the total value of the company? (Enter your answers in whole dollars, not in millions.) c. What will be the total value of the stock held by new investors? (Enter your answers in whole dollars,…
What is the weighted-average cost of capital for SKYE Corporation given the following information? Equity shares outstanding Stock price per share Yield to maturity on debt Book value of interest-bearing debt Coupon interest rate on debt. Interest rate on government bonds SKYE's equity beta Historical excess return on stocks Tax rate Note: Enter your answer to 1 decimal place. Weighted-average cost of capital % 1 million. $ 35 7.68% $14 million 9% 7% 0.75 7.0% 40%
Market Value Capital Structure Suppose the Schoof Company has this book value balance sheet: 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 $
Hewlard Pocket's market value balance sheet is given. Assets Liabilities and Shareholders' Equity A. Original balance sheet Cash $ 150,000 Debt Other assets 950,000 Equity 1,100,000 Value of firm $1,100,000 Value of firm $1,100,000 Shares outstanding Price per share 100,000 $1,100,000 / 100,000 = $11 %D Pocket needs to hold on to $76,000 of cash for a future investment. Nevertheless, it decides to pay a cash dividend of $1.90 per share and to replace cash as needed with a new issue of shares. After the dividend is paid and the new stock is issued: a. What will be the price per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be the total value of the company? (Enter your answers in whole dollars, not in millions.) c. What will be the total value of the stock held by new investors? (Enter your answers in whole dollars, not in millions. Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) d.…
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Compute the free cash flow to equity for a firm with the following conditions (each account is reported on a per share basis): Net Income $9.25 Depreciation $1.52 Proceeds from a Bond Issue $3.00 Total Debt Repayments $0.45 Change in Net Working Capital - $1.00 $15.22. O $14.32. $13.22. $12.32.
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What is the net asset value of an investment company with $10,400,000 in assets, $590,000 in current liabilities, and 1,110,000 shares outstanding? Round your answer to the nearest cent. $ ..... per share
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Calculate the weights of capital components based on the book value balance sheet. weight of debt: Wd weight of preferred stock: Wp weight of total common equity: We Here is the condensed 2015 balance sheet for Skye Computer Company (in thousands of dollars): CONDENSED BALANCE SHEET FOR SKYE COMPUTER COMPANY FY2015 Current assets $2,000 Net fixed assets 3,000 Total assets $5,000 Total debt $2,100 Preferred stock 250 Common stock 1,300 Retained earnings 1,350 Total common equity $2,650 Total liabilities & equity $5,000 The firm's marginal tax rate is 35%. The firm's currently outstanding 10% annual coupon rate long-term debt sells at $1,051.11. The debt matures in 7 years. Coupon interest is paid semiannually. Skye's preferred stock pays a dividend of $3.30 per share, and its preferred stock sells for $30 per share. Skye's earnings per share…
McRae Corporation's total current assets are $380,000, its noncurrent assets are $500,000, its total current liabilities are $340,000, its long-term liabilities are $250,000, and its stockholders' equity is $290,000. How much is the working capital? A. $290,000 B. $380,000 C. $40,000 D. $250,000

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