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Dippy Donuts total assets equal $17 million. Its book value of equity is $7 million. Excess cash is $150,000. The market val

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Answer #1

Debt to enterprise value = 50%

Debt / (Debt+ Market value of equity) = 50%

Debt / (Debt + 10 million) = 50%

Debt = 50% debt + 5 million

Debt - 50% debt = 5 million

Debt = 5 million / 0.5

Debt = 10 million

Therefore, the book value of debt is 10 million.

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