Suppose the Schoof Company has this book value balance sheet: Current assets Fixed assets Short-term debt Long-term debt Common equity Total capital $ $30,000,000 $ 70,000,000 Total assets The notes payable are to banks, and the interest rate on this debt is 7%, 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: 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%, and this is the presen maturity on the bonds. The common stock sells at a price of $60 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and perce values to two decimal places. Current liabilities Notes payable $100,000,000 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 %
Suppose the Schoof Company has this book value balance sheet: Current assets Fixed assets Short-term debt Long-term debt Common equity Total capital $ $30,000,000 $ 70,000,000 Total assets The notes payable are to banks, and the interest rate on this debt is 7%, 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: 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%, and this is the presen maturity on the bonds. The common stock sells at a price of $60 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and perce values to two decimal places. Current liabilities Notes payable $100,000,000 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 %
Chapter7: Types And Costs Of Financial Capital
Section: Chapter Questions
Problem 1bM
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Transcribed Image Text:Suppose the Schoof Company has this book value balance sheet:
Current assets
Fixed assets
Total assets
Short-term debt
Long-term debt
Common equity
Total capital
$
$30,000,000
$
70,000,000
$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. 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%, and this is the present yield to
maturity on the bonds. The common stock sells at a price of $60 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage
values to two decimal places.
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
%
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