Willerton Industries’ long term debt is comprised of 20-year $1,000 face value bonds totaling $65 million...

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Finance

Willerton Industries’ long term debt is comprised of 20-year$1,000 face value bonds totaling $65 million issued seven years agoat an 8% coupon rate. The bonds are now selling to yield 6%.Willerton’s preferred is from a single issue of $100 par valuetotaling $15 million, 9% preferred stock that is now selling toyield 8%. Willerton has four million shares of common stockoutstanding at a current market price of $31. Calculate Willerton’smarket value based capital structure.
Market value of debt:
__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Market value of preferred stock

Total market values
Source of capital
amount
market value
total market value
%
Debt
Preferred stock
Equities
Total

Answer & Explanation Solved by verified expert

4.5 Ratings (1132 Votes)

Market value of debt Cash flows from the bond will occur for 207 13 more years The annual cash flow in the form of coupon 8 of 1000 80 Thus the price of a bond present value of 80 for 13 years See Answer

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Willerton Industries’ long term debt is comprised of 20-year$1,000 face value bonds totaling $65 million issued seven years agoat an 8% coupon rate. The bonds are now selling to yield 6%.Willerton’s preferred is from a single issue of $100 par valuetotaling $15 million, 9% preferred stock that is now selling toyield 8%. Willerton has four million shares of common stockoutstanding at a current market price of $31. Calculate Willerton’smarket value based capital structure.Market value of debt:______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Market value of preferred stock____________________________________________________________________________________________________________________________________________________________ Total market valuesSource of capitalamountmarket valuetotal market value%DebtPreferred stockEquitiesTotal

Source of capital	amount	market value	total market value	%
Debt
Preferred stock
Equities
Total