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Market Value Capital Structure Suppose the Schoof Company has this book value balance sheet: Current assets $30,000,000 $20,000,000 10,000,000 30,000,000 1,000,000 Fixed assets Current liabilities
Market Value Capital Structure Suppose the Schoof Company has this book value balance sheet: Current assets $30,000,000 $20,000,000 10,000,000 30,000,000 1,000,000 Fixed assets Current liabilities Notes payable Long-term debt Common stock (1 million shares) Retained earnings Total liabilities and equity 70,000,000 39,000,000 Total assets $100,000,000 $100,000,000 The notes payable are to banks, and the interest rate on this debt is 8%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the company's permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of $1,000, an annual coupon interest rate of 6%, and a 25-year maturity. The going rate of interest on new long-term debt, rd, is 12%, and this is the present yield to maturity on the bonds. The common stock sells at a price of $52 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places. % Short-term debt Long-term debt Common equity Total capital %
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