Assume that the following balance sheets are stated at book
value.
Meat Co.
Current assets
$...
Assume that the following balance sheets are stated at book
value.
Meat Co.
Current assets
$
12,600
Current
liabilities
$
5,600
Net fixed
assets
36,900
Long-term debt
10,100
Equity
33,800
Total
$
49,500
Total
$
49,500
Loaf, Inc.
Current assets
$
3,700
Current
liabilities
$
1,600
Net fixed
assets
7,600
Long-term debt
2,200
Equity
7,500
Total
$
11,300
Total
$
11,300
Suppose the fair market value of Loaf’s fixed assets is $11,100
versus the $7,600 book value shown. Meat pays...
Suppose the Schoof Company has this book value balance
sheet:
Current Assets:
$30,000,000
Current Liabili
Suppose the Schoof Company has this book value balance
sheet:
Current Assets:
$30,000,000
Current Liabilities: $20,000,000
Fixed Assets:
$70,000,000
Notes Payable: $10,000,000
Total Assets:
$100,000,000
Long Term Debt: $30,000,000
Common stock (1 million shares): 1,000,000
Retained Earnings: $39,000,000
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...
Market Value Capital Structure
Suppose the Schoof Company has this book value balance
sheet:
Current assets...
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 11%, the same as the
rate on new bank loans. These bank loans are not used for seasonal
financing but instead...
Market Value Capital Structure
Suppose the Schoof Company has this book value balance
sheet:
Current assets...
Market Value Capital Structure
Suppose the Schoof Company has this book value balance
sheet:
Current assets
$30,000,000
Current liabilities
$20,000,000
Fixed assets
70,000,000
Notes payable
$10,000,000
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 11%, the same as the rate on new bank loans. These bank
loans are not used for seasonal financing but...
Suppose the Schoof Company has this book value balance
sheet:
Current assets
$30,000,000
Current liabilities
$20,000,000...
Suppose the Schoof Company has this book value balance
sheet:
Current assets
$30,000,000
Current liabilities
$20,000,000
Fixed assets
70,000,000
Notes payable
$10,000,000
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...
Suppose the Schoof Company has this book value balance sheet:
Current assets $30,000,000 Current liabilities $20,000,000...
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 7%, the same as the rate on new bank
loans. These bank loans are not used for seasonal financing but
instead are part of...
Silver Enterprises has acquired All Gold Mining in a merger
transaction. The following balance sheets represent...
Silver Enterprises has acquired All Gold Mining in a merger
transaction. The following balance sheets represent the premerger
book values for both firms:
Silver Enterprises
Current assets
$
6,200
Current
liabilities
$
4,200
Other assets
2,600
Long-term debt
8,900
Net fixed
assets
29,300
Equity
25,000
Total
$
38,100
Total
$
38,100
All Gold Mining
Current assets
$
2,700
Current
liabilities
$
1,630
Other assets
790
Long-term debt
0
Net fixed
assets
12,400
Equity
14,260
Total
$
15,890
Total
$
15,890...
Silver Enterprises has acquired All Gold Mining in a merger
transaction. The following balance sheets represent...
Silver Enterprises has acquired All Gold Mining in a merger
transaction. The following balance sheets represent the premerger
book values for both firms:
Silver Enterprises
Current assets
$
5,600
Current
liabilities
$
3,600
Other assets
2,000
Long-term debt
8,300
Net fixed
assets
23,300
Equity
19,000
Total
$
30,900
Total
$
30,900
All Gold Mining
Current assets
$
2,100
Current
liabilities
$
1,510
Other assets
670
Long-term debt
0
Net fixed
assets
10,000
Equity
11,260
Total
$
12,770
Total
$
12,770...
Market Value Capital Structure
Suppose the Schoof Company has this book value balance
sheet:
Current assets...
Market Value Capital Structure
Suppose the Schoof Company has this book value balance
sheet:
Current assets
$30,000,000
Current liabilities
$20,000,000
Fixed assets
70,000,000
Notes payable
$10,000,000
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 7%, the same as the rate on new bank loans. These bank
loans are not used for seasonal financing but...
Silver Enterprises has acquired All Gold Mining in a merger
transaction. The following balance sheets represent...
Silver Enterprises has acquired All Gold Mining in a merger
transaction. The following balance sheets represent the pre-merger
book values for both firms:
Silver Enterprises
Current
Assets
8,600
Current Liabilities
5,200
Other
Assets
1,800
Long-Term
Debt
3,700
Net Fixed Assets
15,800
Equity
17,300
Total
26,200
Total
26,200
All Gold Mining
Current Assets
2,500
Current
Liabilities
2,300
Other Assets 850
Long-Term
Debt
0
Net Fixed
Assets
5,800
Equity
6,850
Total
9,150
Total
9,150
Construct the balance sheet for the new...