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4. The Sheinhardt Wig Company has 15 million shares outstanding at a price of $60/share. The firm has $500 million of debt, which we'll
4. The Sheinhardt Wig Company has 15 million shares outstanding at a price of $60/share. The firm has $500 million of debt, which we'll assume for now is both the market and book value of its debt. a. What does Sheinhardt's market value balance sheet look like? b. Now imagine that Sheinhardt signs a contract with an important new customer, and we see its stock price increase by 10%. The firm's bond prices also increase by 2%. What does the new market value balance sheet look like? What effect would this news have on the accounting balance sheet? c. Explain the changes in the market value balance sheet. and why they differ from any changes in the accounting balance sheet.
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