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A. Calculate the book value weight (Ignore short-term liabilities); B. Calculate the market price per bond. C. Calculate the market value of preferred stocks;
A. Calculate the book value weight (Ignore short-term liabilities); B. Calculate the market price per bond. C. Calculate the market value of preferred stocks; D Calculate the market value weight of the firm's capital structure. (Ignore short-term liabilities) A. DETERMINE THIS COMPANY'S BOOK VALUE CAPITAL STRUCTURE B. DETERMINE THIS COMPANY'S MARKET VALUE CAPITAL STRUCTURE C. MARKET PRICE PER PREFERRED STOCK: D. MARKET-VALUE WEIGHT Assets Current Assets Net Fixed Assets 100 Total Assets 400 Balance Sheet (In million dollars) December 31, 2012 Liabilities Accounts Payable Notes Payable Bonds (6%) Preferred Stocks Common Stock ($1 Par) Paid in Capital Retained Earnings Tot Liab. & Equity 20 80 150 50 10 24 166 500 i. Bonds mature in 10 years; the coupon rate is 6%, and the required rate of return is 8%. ii. Preferred stock's expected return is 8% and the required rate of return is 12%. Common Stock: The growth rate is 20% for the first three years, and then 7% onwards. The required rate of return is 17%. The dividend is $2.00 at the beginning of the investment horizon. 500
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