Question
Current assets $50 Fixed assets 50 Total assets $100 Current liabilities $30 Long-term debt 40 Total liabilities $70 Stockholders equity $30 Total liabilities and equity
Current assets $50
Fixed assets 50
Total assets $100
Current liabilities $30
Long-term debt 40
Total liabilities $70
Stockholders equity $30
Total liabilities
and equity $100
Shares outstanding: 11 million
Stock price: $6
Beta: 1.01
Risk free rate: 1.5%
Equity Market Risk Premium: 6.5%
YTM or Current borrowing cost: 7%
The firms debt is trading at 80 percent of its book value.
Tax rate: 21 percent
How do I calculate market value of debt from these numbers?
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Money Talks Explaining How Money Really Works
Authors: Nina Bandelj ,Frederick F. Wherry ,Viviana A. Zelizer
1st Edition
0691202893, 978-0691202891
