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Market Value Capital Structure Suppose the Schoof Company

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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 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 to banks, and the interest rate on this debt is 8%, 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 25-year maturity. The going rate of interest on new long-term debt, rd, is 11%, and this is the present yield to maturity on the bonds. The common stock sells at a price of $70 per share. Calculate the firm's market value capital structure. Round your answers to two decimal places.
Submitted: 1 year ago.
Category: Single Problem
Expert:  F. Naz replied 1 year ago.

What is your deadline, thanks.

Customer: replied 1 year ago.
in 30 minutes
Expert:  F. Naz replied 1 year ago.

I can provide answer in next 2 to 3 hours, thanks.

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