A business has equity capital of 23,600,000 €. The company also has leverage, as it has...
A business has equity capital of 23,600,000 €. The company also has leverage, as it has issued a debt (bonds) worth 7,900,000€ which is sold at par. The shares in issue are 450,000 and their current price is 38.50 € per share. The tax rate is 35%. What is the value of non-negotiable assets?
Homework Answers
Non-negotiable Assets are those which CANNOT be transferred in SECONDARY MARKET.
Company has ISSUED a Debt(Bonds) & they are SOLD at par. As they are ISSUED & are SOLD, the are traded in secondary market & hence they are Negotiable.
Non-negotiable Assets = Total Equity Capital - Equity Capital that are ISSUED i.e. Negotiable
= 23600000 - (450000*38.5)
= 23600000 - 17325000
= 6275000
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