ZuoTi.Pro
Question

A firm has current assets which could be sold for their book value of $10 million....

A firm has current assets which could be sold for their book value of $10 million. The book value of fixed assets is $60 million, but they could be sold for $95 million today. The firm has total debt with a book value of $40 million, but interest rate declines have caused the market value of the debt to increase to $50 million. What is this firm's market to book ratio?

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Solution :-

particulars Market | Book Value Value Current Assets $ 10 million $10 million Fixed Assets $95 million $ 60 million Total $ 1

0 0
Add a comment
Know the answer?
Add Answer to:
A firm has current assets which could be sold for their book value of $10 million....
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • A firm has current assets that could be sold for their book value of $34 million....

    A firm has current assets that could be sold for their book value of $34 million. The book value of its fixed assets is $72 million, but they could be sold for $102 million today. The firm has total debt with a book value $52 million, but interest rate declines have caused the market value of the debt to increase to $62 million. What is the ratio of the market value of equity to its book value? (Round your answer...

  • Suppose the Schoof Company has this book value balance sheet: Current assets $30,000,000 Current liabilities $10,000,000...

    Suppose the Schoof Company has this book value balance sheet: Current assets $30,000,000 Current liabilities $10,000,000 Fixed assets 50,000,000 Long-term debt 30,000,000   Common stock   (1 million shares) 1,000,000 Retained earnings 39,000,000 Total assets $80,000,000 Total claims $80,000,000 The current liabilities consist entirely of notes payable to banks, and the interest rate on this debt is 9%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the...

  • A firm has total assets of $14 million and a debt/equity ratio of 0.75. Its sales...

    A firm has total assets of $14 million and a debt/equity ratio of 0.75. Its sales are $10 million, and it has total fixed costs of $4 million. If the firm's EBIT is $2 million, its tax rate is 45%, and the interest rate on all of its debt is 10%, what is the firm's ROE?

  • Harrison, Inc., has the following book value balance sheet: Balance Sheet Assets Liabilities and equity   Current...

    Harrison, Inc., has the following book value balance sheet: Balance Sheet Assets Liabilities and equity   Current assets $ 140,000,000   Total debt $ 250,000,000      Equity         Common stock 30,000,000                Capital surplus 77,000,000   Net fixed assets    415,000,000      Accumulated retained earnings 198,000,000   Total shareholders' equity $ 305,000,000   Total assets $ 555,000,000   Total debt and shareholders' equity $ 555,000,000 a. What is the debt–equity ratio based on book values? b. Suppose the market value of the company's debt is...

  • Dippy Donuts' total assets equal $17 million. Its book value of equity is $7 million. Excess...

    Dippy Donuts' total assets equal $17 million. Its book value of equity is $7 million. Excess cash is $150,000. The market value of equity is $10 million and Debt to Enterprise Value ratio is 50%. What is the book value of Dippy's interest bearing debt?

  • Muffin’s Masonry, Inc.’s balance sheet lists net fixed assets as $26 million. The fixed assets could...

    Muffin’s Masonry, Inc.’s balance sheet lists net fixed assets as $26 million. The fixed assets could currently be sold for $43 million. Muffin’s current balance sheet shows current liabilities of $11.5 million and net working capital of $10.5 million. If all the current accounts were liquidated today, the company would receive $7.85 million cash after paying the $11.5 million in current liabilities. What is the book value of Muffin’s Masonry’s assets today and the market value of these assets? (Enter...

  • Calculate the market value of a firm with total assets of $60 million and a net...

    Calculate the market value of a firm with total assets of $60 million and a net worth of $35 million. The firm's cost of equity is 15%, and the cost of perpetual debt is 8%. The firm has a perpetual net operating income (EBIT) of $4.5 million and a marginal tax rate of 35%. $41.67 million $30.00 million $35.83 million $30.83 million 3 pts Ouoction 6

  • MUST SHOW ALL WORK 1.1 Rodgers, Inc. has current assets of $30,000, net fixed assets of...

    MUST SHOW ALL WORK 1.1 Rodgers, Inc. has current assets of $30,000, net fixed assets of $60,000, current liabilities of $16,000, and long-term debt of $54,000. Rodgers, Inc. also has sales of $440,000, costs of $210,000, depreciation expense of $63,000, interest expense of $38,000, and a tax rate of 40%. Also, suppose that the company paid out $30,000 in cash dividends and has 20,000 shares of common stock outstanding. a. What is the value of shareholders' equity? b. How much...

  • Current Assets Investment Policy

    Rentz Corporation is investigating the optimal level of current assets for the coming year. Management expects sales to increase to approximately $2 million as a result of an asset expansion presently being undertaken. Fixed assets total $1 million, and the firm plans to maintain a 40% debt-to-assets ratio. Rentz's interest rate is currently 9% on both short-term and long-term debt (which the firm uses in its permanent structure). Three alternatives regarding the projected current assets level are under consideration: (1)...

  • CURRENT ASSETS INVESTMENT POLICY Rentz Corporation is investigating the optimal level of current assets for the...

    CURRENT ASSETS INVESTMENT POLICY Rentz Corporation is investigating the optimal level of current assets for the coming year. Management expects sales to increase to approximately $2 million as a result of an asset expansion presently being undertaken. Fixed assets total $2 million, and the firm plans to maintain a 40% debt-to-assets ratio. Rentz's interest rate is currently 10% on both short-term and long-term debt (which the firm uses in its permanent structure). Three alternatives regarding the projected current assets level...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT