Question

# I'm having a really hard time with my financial calculator/ excel. I just need the answers...

I'm having a really hard time with my financial calculator/ excel. I just need the answers \$ and %

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 9%, 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 9%, 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 \$60 per share. Calculate the firm's market value capital structure. Round your answers to two decimal places.

 Short-term debt \$10,000,000 ______ % Long-term debt \$______ ______ % Common equity \$______ ______ % Total capital \$______ 100%

#### Homework Answers

Answer #1

Market value of Debt :

Interest = 1000*.09 = 90

Price =[PVA 11%,25*Interest ]+[PVF 11%,25 *Face value]

= [8.42174*90]+[.07361*1000]

= 757.96+ 73.61

=\$ 831.57

**find present value annuity factor and present value factor from there table respectively at 11% for 25 periods

 short term debt 10,000,000 10,000,000/94,947,100= 10.53% long term debt   [30000*831.57] 24,947,100 24,947,100/94,947,100= 26.27% common equity   [1,000,000*60] 60,000,000 60,000,000/94,947,100 = 63.20% Total capital 94,947,100 100%
Know the answer?
Your Answer:

#### Post as a guest

Your Name:

What's your source?

#### Earn Coins

Coins can be redeemed for fabulous gifts.

##### Not the answer you're looking for?
Ask your own homework help question
ADVERTISEMENT
##### Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

ADVERTISEMENT