In order to accurately assess the capital strucutre of a, Ask an Expert

Finance

In order to accurately assess the capital strucutre of a firm it is necessary to convert its balance sheet (book value) figures to a market value basis. Suppose a company's balance sheet information as of today (3/24/2013) is as follows:

Long-term bonds (at par): $10,000,000
Preferred stock: $2,000,000
Common stock ($10 par value): $10,000,000
Retained earnings: $4,000,000
Total debt and equity) $26,000,000
The company's bonds have an annual 4% coupon (or legal) rate, payable semi-annually, and a $1,000 maturity value. The bonds mature on 3/24/2023 and the yield to maturity (rd) on the bonds is currently 9 percent. Based on this information, what is the total market value of this firm's debt in dollars?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9859298

Have any Question?Write your Review or question?

Related Questions in Basic Finance

What choices does one have to make when deciding on health

What choices does one have to make when deciding on health care coverage options? What are consumer health care costs in today's market?

Bob katz would like to save 300000 over the next 20 years

Bob Katz would like to save $300,000 over the next 20 years. If Bob knows today that he will be given $100,000 in 15 years as part of an inheritance, how much would Bob still need to save annually over the next 20 years ...

At the beginning of 2016 winston corporation issued 10

At the beginning of 2016, Winston Corporation issued 10% bonds with a face value of P600,000. These bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for P555,8 ...

What are the ways that it can help comply with legal

What are the ways that IT can help comply with legal requirements and social responsibilities surrounding the sales of alcohol?

Explain how the company newmans own brand fulfills the

Explain how the company Newman's Own brand fulfills the definition of a business for profit and a non-profit business at the same time. Consider in the response the functions of business, entrepreneurship and production ...

A 2-year treasury security currently earns 197 percent over

A 2-year Treasury security currently earns 1.97 percent. Over the next two years, the real risk-free rate is expected to be 1.00 percent per year and the inflation premium is expected to be 0.60 percent per year. Calcula ...

Question - a us importer has arranged to purchase goods

Question - A US importer has arranged to purchase goods costing 157,895 Yuan from a Chinese exporter, and will sell those goods for a guaranteed price of $1,325,000. The goods will be delivered immediately, but the impor ...

Stock in the abc corporation was contributed to the london

Stock in the ABC Corporation was contributed to the London School of Economics and Business, a public school in the United Kingdom. The basis in the stock was $1,000, but its fair market value was $1,500 at the time of t ...

Find the present value of the following ordinary annuities

Find the present value of the following ordinary annuities (See hint for Problems 4-9): $400 per year for 10 years at 10%. $200 per year for 5 ears at 5% $400 per year for 5 years at 0%. Now rework parts a, b and c assum ...

In the second presidential debate in october 2012 gov

In the second presidential debate in October 2012, Gov. Romney referred to China as a currency manipulator. President Trump has echoed this claim. What does this mean? How could China manipulate the value of its currency ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert