Question
In 2016, ABC corporation was formed by selling 200,000 shares of stocks (each $3) and issuing 400 bonds (each $1,000). Today, ABC's stock is selling
In 2016, ABC corporation was formed by selling 200,000 shares of stocks (each $3) and
issuing 400 bonds (each $1,000). Today, ABC's stock is selling for $30 per share. As a result of changes
in the interest rate, the market value of ABC's bond now is $470,000.
a. In 2016, what was the book value of ABC's assets?
b. What are the book value and market value of the firm now?
c. What is the market value of the firm's assets now?
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Finance for Executives Managing for Value Creation
Authors: Gabriel Hawawini, Claude Viallet
4th edition
9781133169949, 538751347, 978-0538751346
