Suppose the Schoof Company has this book value balance sheet:$30,000,000Current assetsFixed assetsTotal assetsShort-term debtLong-term debtCommon equityTotal capital$70,000,000$$100,000,000Current liabilitiesNotes payableThe notes payable are 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 capitalstructure. The long-term debt consists of 30,000 bonds, each with a par value of $1,000, an annual couponnterest rate of 7%, and a 25-year maturity. The going rate of interest on new long-term debt, rd, is 12%, and thiss the present yield to maturity on the bonds. The common stock sells at a price of $60 per share. Calculate thefirm's market value capital structure. Do not round intermediate calculations. Round the monetary values to thenearest dollar and percentage values to two decimal places.Long-term debtCommon stock (1 million shares)Retained earningsTotal liabilities and equity%$20,000,00010,000,00030,000,0001,000,00039,000,000$100,000,000%

Capital structure consists of debt, equity and loans. For calculating cost of capital weights are…

urrent assets xed assets $30,000,000 70,000,000 Current liabilities Notes payable $100,000,000 Long-term debt Common stock (1 million shares) Retained earnings Total liabilities and equity $20,000 10,000 30,000 1,000 39,000 $100,000 otal assets he notes payable are to banks, and the interest rate on this debt is 9%, the same as the rate on new bank loa hese bank loans are not used for seasonal financing but instead are part of the company's permanent capital

urrent assets xed assets $30,000,000 70,000,000 Current liabilities Notes payable $100,000,000 Long-term debt Common stock (1 million shares) Retained earnings Total liabilities and equity $20,000 10,000 30,000 1,000 39,000 $100,000 otal assets he notes payable are to banks, and the interest rate on this debt is 9%, the same as the rate on new bank loa hese bank loans are not used for seasonal financing but instead are part of the company's permanent capital

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 16P: Suppose the Schoof Company has this book value balance sheet: The notes payable are to banks, and...

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