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Buckeye Industries has a bond issue with a face value of $1,000 that is coming due in one year. The value of the company's assets
Buckeye Industries has a bond issue with a face value of $1,000 that is coming due in one year. The value of the company's assets is currently $1,120. Urban Meyer, the CEO believes that the assets in the company will be worth either $950 or $1,410 in a year. The going rate on one-year T-bills is 5 percent a-1. What is the value of the company's equity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a-2. What is the value of the debt? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a-1. Value of equity a-2. Value of debt Suppose the company can reconfigure its existing assets in such a way that the value in a year will be $830 or $1,630. b. If the current value of the assets is unchanged, what is the new value of the company's equity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
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