Question
Suppose the School Company has this book value balance sheet: Current assets $30,000,000 Current liabilities $10,000,000 Notes payable 10,000,000 Fixed assets 50,000,000 Long-term debt 20,000,000
Suppose the School Company has this book value balance sheet: Current assets $30,000,000 Current liabilities $10,000,000 Notes payable 10,000,000 Fixed assets 50,000,000 Long-term debt 20,000,000 Common stock (1 million shares) 1,000,000 Retained earnings 39,000,000 Total assets $80,000,000 Total claims $80,000,000 The current liabilities consist entirely of notes payable to banks, and the interest rate on this debt is 9%, 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 7%, and a 20-year maturity. The going rate of interest on new long-term debt, rd, is 11%, and this is the present yield to maturity on the bonds. The common stock sells at a price of $66 per share. Calculate the firm's market value capital structure. Round your answers to two decimal places, but do not round intermediate computations, it will change the answer. Calculate the following for BOTH dollar and percentage amounts. Thanks!
Short-term debt = ___% and $____
Long-term debt = ___% and $____
Common equity= ___% and $____
Total capital = ___% and $____
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