Transcribed Image Text
Market Value Capital StructureSuppose the Schoof Company has this book value balancesheet:Current assets$30,000,000Current liabilities$20,000,000Fixed assets70,000,000Notes payable$10,000,000Long-term debt30,000,000 Common stock (1 millionshares)1,000,000Retained earnings39,000,000Total assets$100,000,000Total liabilities and equity$100,000,000The notes payable are to banks, and the interest rate on thisdebt is 10%, the same as the rate on new bank loans. These bankloans are not used for seasonal financing but instead are part ofthe company's permanent capital structure. The long-term debtconsists of 30,000 bonds, each with a par value of $1,000, anannual coupon interest rate of 7%, and a 15-year maturity. Thegoing rate of interest on new long-term debt, rd, is 11%, and thisis the present yield to maturity on the bonds. The common stocksells at a price of $60 per share. Calculate the firm's marketvalue capital structure. Do not round intermediatecalculations. Round your answers to two decimal places.Short-term debt$%Long-term debtCommon equityTotal capital$%