16. Capital Structure. Examine the following book-value balance sheet for University Products, Inc. What is the capital structure of the firm on the basis of market values? The preferred stock currently sells for $15 per share and the common stock for $20 per share. There are 1 million common shares outstanding. (LOI)

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BOOK VALUE BALANCE SHEET (all values in millions) Assets Cash and short-term securities $ 1 Accounts receivable Inventories Plant and equipment Total 3 72 21 Liabilities and Net Worth Bonds, coupon = 8%, paid annually (maturity = 10 years, current yield to maturity = 9%) Preferred stock (par value $20 per share) Common stock (par value $.10) Additional paid-in stockholders' capital Retained earnings $32 Total $10.0 2.0 .1 9.9 10.0 $32.0