Problem 9-16 Market Value Capital Structure Suppose the Schoof Company has this book value balance sheet: Current assets $30,000,000 Current liabilities $10,000,000 Fixed...

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Finance

Problem 9-16
Market Value Capital Structure
Suppose the Schoof Company has this book value balancesheet:
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 tobanks, and the interest rate on this debt is 8%, the same as therate on new bank loans. These bank loans are not used for seasonalfinancing but instead are part of the company's permanent capitalstructure. The long-term debt consists of 30,000 bonds, each with apar value of $1,000, an annual coupon interest rate of 7%, and a20-year maturity. The going rate of interest on new long-term debt,r_d, is 11%, and this is the present yield to maturity onthe bonds. The common stock sells at a price of $52 per share.Calculate the firm's market value capital structure. Roundyour answers to two decimal places.
Short-term debt $   %
Long-term debt $   %
Common equity $   %
Total capital $   %

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Capital Components Market Value Weight of Capital Structure Shortterm debt 10000000 1213 Longterm debt 20444100 2480 Common equity 52000000 6307 Total capital 82444100 10000 Market Value of each capital components Market Value of Shortterm debt Market See Answer

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Problem 9-16Market Value Capital StructureSuppose the Schoof Company has this book value balancesheet:Current assets$30,000,000Current liabilities$10,000,000Fixed assets50,000,000Long-term debt30,000,000 Common stock (1 million shares)1,000,000Retained earnings39,000,000Total assets$80,000,000Total claims$80,000,000The current liabilities consist entirely of notes payable tobanks, and the interest rate on this debt is 8%, the same as therate on new bank loans. These bank loans are not used for seasonalfinancing but instead are part of the company's permanent capitalstructure. The long-term debt consists of 30,000 bonds, each with apar value of $1,000, an annual coupon interest rate of 7%, and a20-year maturity. The going rate of interest on new long-term debt,rd, is 11%, and this is the present yield to maturity onthe bonds. The common stock sells at a price of $52 per share.Calculate the firm's market value capital structure. Roundyour answers to two decimal places.Short-term debt$ %Long-term debt$ %Common equity$ %Total capital$ %

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

Short-term debt	$	%
Long-term debt	$	%
Common equity	$	%
Total capital	$	%