Homework answers / question archive / Suppose the Schoof Company has this book value balance sheet:  Current assets       $30,000,000        Current liabilities         $20,000,000                                                            Notes payable             10,000,000 Fixed assets             70,000,000         Long-term debt           30,000,000                                                             Common stock (1 million shares) 1,000,000                                                               Retained earnings         39,000,000 Total assets            $100,000,000         Total liabilities and equity  $100,000,000  The notes payable are to banks, and the interest rate on this debt is 10%, the same as the rate on new bank loans

Suppose the Schoof Company has this book value balance sheet:  Current assets       $30,000,000        Current liabilities         $20,000,000                                                            Notes payable             10,000,000 Fixed assets             70,000,000         Long-term debt           30,000,000                                                             Common stock (1 million shares) 1,000,000                                                               Retained earnings         39,000,000 Total assets            $100,000,000         Total liabilities and equity  $100,000,000  The notes payable are to banks, and the interest rate on this debt is 10%, the same as the rate on new bank loans

Finance

Share With

Suppose the Schoof Company has this book value balance sheet: 
Current assets       $30,000,000        Current liabilities         $20,000,000

                                                           Notes payable             10,000,000

Fixed assets             70,000,000         Long-term debt           30,000,000

                                                            Common stock (1 million shares) 1,000,000

                                                              Retained earnings         39,000,000

Total assets            $100,000,000         Total liabilities and equity  $100,000,000 
The notes payable are to banks, and the interest rate on this debt is 10%, 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 12%, and this is the present yield to maturity on the bonds. The common stock sells at a price of $52 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places.