Homework Answers
| Face value of Bonds | $1,000 | ||||||||||
| A | Long Term Debt | $30,000,000 | (30000*1000) | ||||||||
| Rate | Market rate of bonds | 11% | |||||||||
| Nper | Number of years to maturity | 25 | |||||||||
| Pmt=(A*6%) | Annual Coupon Payment | $1,800,000 | |||||||||
| Fv=A | Payment at maturity | $30,000,000 | |||||||||
| PV | Current Market Value of Bonds | $17,367,383 | (Using PV function of excel with Rate=11%,Nper=25,Pmt=-1800000,Fv=-30000000) | ||||||||
| Mb | Current Market Value of Bonds | $17,367,383 | |||||||||
| Me | Market Value of Common Equity | $58,000,000 | ($58*1million) | ||||||||
| Mn | Market Value of Notes Payable | $10,000,000 | |||||||||
| M=Mb+Me+Mn | Total Market Value of Capital | $85,367,383 | |||||||||
| Wb=Mb/M | Weight of Bonds | 0.2034 | |||||||||
| We=Me/M | Weight of Equity | 0.6794 | |||||||||
| Wn=Mn/M | Weight of Notes Payable | 0.1171 | |||||||||
| Amount | Percentage | ||||||||||
| Short term debt | $10,000,000 | 11.71% | |||||||||
| Long term debt | $17,367,383 | 20.34% | |||||||||
| Common Equity | $58,000,000 | 67.94% | |||||||||
 |
|||||||||||
Add Answer to:
Problem 9-16 Market Value Capital Structure Suppose the Schoof Company has this book value balance sheet: Current asset...
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...
Market Value Capital Structure Suppose the Schoof Company has this book value balance sheet: ...
Market Value Capital Structure Suppose the Schoof Company has this book value balance sheet: Current assets $30,000,000 Current liabilities $20,000,000 Fixed assets 70,000,000 Notes payable $10,000,000 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 8%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but...
QuesLUI DULU Problem 9-16 Check My Work eBook Problem 9-16 Market Value Capital Structure Suppose the...
QuesLUI DULU Problem 9-16 Check My Work eBook Problem 9-16 Market Value Capital Structure Suppose the Schoof Company has this book value balance sheet: Current assets Fixed assets $30,000,000 70,000,000 Current liabilities Notes payable 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 Total assets $100,000,000 The notes payable are to banks, and the interest rate on this debt is 7%, the same as the rate on new bank loans....
The notes payable are to banks, and the interest rate on this debt is 10%, the...
The notes payable are to banks, and the
interest rate on this debt is 10%, 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 8%, and a 15-year
maturity. The going rate of interest on new long-term debt, rd, is
10%,...
11. The Herbert Sherbet Company has this book value balance sheet: Cash Inventory Fixed assets $30,000,000 10,000,000 2...
11. The Herbert Sherbet Company has this book value balance sheet: Cash Inventory Fixed assets $30,000,000 10,000,000 20,000,000 Current liabilities $18,000,000 Long-term debt 12,000,000 Common equity Common stock (1 million shares) 1,000,000 Retained earnings 29,000,000 Total assets $60,000,000 Total claims $60,000,000 The current liabilities consist entirely of notes payable to banks, and the interest rate on this debt is 10 percent, the same as the rate on new bank loans. The current liabilities will be paid off with cash in...
416. Capital Structure. Examine the following book- value balance sheet for University Products, Inc. What is...
416. Capital Structure. Examine the following book- value balance sheet for University Products, Inc. What is the capital structure of the firm based on market values? The preferred stock currently sells for $15 per share and the common stock for $20 per share. There are one million common shares out- standing. (LO2) Assets Cash and short-term securities SI 3 Accounts receivable Inventories Plant and equipment Total Liabilities and Net Worth Bonds, coupon = 8%, paid annually (maturity = 10 years,...
Exhibit 10.1 Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, i...
Exhibit 10.1 Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, including plastic grocery bags, styrofoam cups, and fertilizers, to estimate the firm's weighted average cost of capital. The balance sheet and some other information are provided below. Assets Current assets Net plant, property, and equipment Total assets $38,000,000 $101,000,000 $139,000,000 Liabilities and Equity Accounts payable Accruals Current liabilities Long-term debt (40,000 bonds, $1,000 par value) Total liabilities Common stock (10,000,000...
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...
value: 0.00 points The table below shows a book balance sheet for the Wishing Well Motel...
value: 0.00 points The table below shows a book balance sheet for the Wishing Well Motel chain. The company's long-term debt is secured by its real estate assets, but it also uses short-term bank loans as a permanent source of financing it pays 13% interest on the bank debt and 11% interest on the secured debt. Wishing Well has 10 million shares of stock outstanding, trading at $85 per share. The expected return on Wishing Well's common stock is 18%....
Book value versus market value components. Compare Trout, Inc. with Salmon Enterprises, using the balance sheet...
Book value versus market value components. Compare Trout, Inc. with Salmon Enterprises, using the balance sheet of Trout and the market data of Salmon for the weights in the weighted average cost of capital: EIf the after-tax cost of debt is 8.6% for both companies and the cost of equity is 12.82%, which company has the higher WACC? What is the book value adjusted WACC for Trout, Inc.? Current assets: Long-term assets: Total assets: $2,888,889 $10,111,111 $13,000,000 Trout, Inc. Current...
QuesLUI DULU Problem 9-16 Check My Work eBook Problem 9-16 Market Value Capital Structure Suppose the Schoof Company has this book value balance sheet: Current assets Fixed assets $30,000,000 70,000,000 Current liabilities Notes payable 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 Total assets $100,000,000 The notes payable are to banks, and the interest rate on this debt is 7%, the same as the rate on new bank loans....
The notes payable are to banks, and the
interest rate on this debt is 10%, 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 8%, and a 15-year
maturity. The going rate of interest on new long-term debt, rd, is
10%,...
11. The Herbert Sherbet Company has this book value balance sheet: Cash Inventory Fixed assets $30,000,000 10,000,000 20,000,000 Current liabilities $18,000,000 Long-term debt 12,000,000 Common equity Common stock (1 million shares) 1,000,000 Retained earnings 29,000,000 Total assets $60,000,000 Total claims $60,000,000 The current liabilities consist entirely of notes payable to banks, and the interest rate on this debt is 10 percent, the same as the rate on new bank loans. The current liabilities will be paid off with cash in...
416. Capital Structure. Examine the following book- value balance sheet for University Products, Inc. What is the capital structure of the firm based on market values? The preferred stock currently sells for $15 per share and the common stock for $20 per share. There are one million common shares out- standing. (LO2) Assets Cash and short-term securities SI 3 Accounts receivable Inventories Plant and equipment Total Liabilities and Net Worth Bonds, coupon = 8%, paid annually (maturity = 10 years,...
Exhibit 10.1 Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, including plastic grocery bags, styrofoam cups, and fertilizers, to estimate the firm's weighted average cost of capital. The balance sheet and some other information are provided below. Assets Current assets Net plant, property, and equipment Total assets $38,000,000 $101,000,000 $139,000,000 Liabilities and Equity Accounts payable Accruals Current liabilities Long-term debt (40,000 bonds, $1,000 par value) Total liabilities Common stock (10,000,000...
value: 0.00 points The table below shows a book balance sheet for the Wishing Well Motel chain. The company's long-term debt is secured by its real estate assets, but it also uses short-term bank loans as a permanent source of financing it pays 13% interest on the bank debt and 11% interest on the secured debt. Wishing Well has 10 million shares of stock outstanding, trading at $85 per share. The expected return on Wishing Well's common stock is 18%....
Book value versus market value components. Compare Trout, Inc. with Salmon Enterprises, using the balance sheet of Trout and the market data of Salmon for the weights in the weighted average cost of capital: EIf the after-tax cost of debt is 8.6% for both companies and the cost of equity is 12.82%, which company has the higher WACC? What is the book value adjusted WACC for Trout, Inc.? Current assets: Long-term assets: Total assets: $2,888,889 $10,111,111 $13,000,000 Trout, Inc. Current...
Most questions answered within 3 hours.
-
Consider the reaction, C3 H8 + O2 --> CO2 + H2O. How many
moles of O2...
asked 48 minutes ago -
You and your opponent both roll a fair die. If you both roll the
same number,...
asked 1 hour ago -
In a study of the accuracy of fast food drive-through orders,
Restaurant A had 257 accurate...
asked 1 hour ago -
Identify and describe in detail the four categories of
institutions that could be included in a...
asked 1 hour ago -
In python
class Customer:
def __init__(self, customer_id, last_name, first_name, phone_number, address):
self._customer_id = int(customer_id)
self._last_name =...
asked 1 hour ago -
What is an example of a limitation in implementing a new
ERP system and how it...
asked 1 hour ago -
In a section of 9.7cm of an artery with a radius of 2.6mm there
is a...
asked 1 hour ago -
the two carboxylic acid groups of aspartic acid have different
acidities with pKa values of 2.1...
asked 1 hour ago -
Would CuCO3 aqueous salt combined with calcium chloride
form a solid precipitate? If so, what would...
asked 1 hour ago -
How do ECM Solutions assist in embedding a culture of continuous
improvement in an organization? (Project...
asked 1 hour ago -
Directions
These directions introduce the idea of Essential Questions.
Since this may be a new concept...
asked 1 hour ago -
1.b. Fiscal policy is said to suffer from ‘crowding out’.
Explain what this means and why...
asked 1 hour ago