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
(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 percent, the same as the rate on new bank loans. The long-term debt consists of 30,000 bonds, each of which has a par value of $1,000, carries an annual coupon interest rate of 9 percent, and matures in 20 years. The going rate of interest on new long-term debt,, is 11 percent, and this is the present yield to maturity on the bonds. The common stock sells at a price of $58 per share. Calculate the firm's market value capital structure. Round your answers to two decimal places.
Short-term debt a. b.
Long-term debt c. d.
Common equity e. f.
Total capital g. h.
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