The following information pertains to the capital structure of a firm: Debt: Fifteen hundred bonds with face

Question:

The following information pertains to the capital structure of a firm:

Debt: Fifteen hundred bonds with face values of $1000 and a 10-year term were issued three years ago with a coupon rate of 10%. Today the bonds are selling to yield 8%.

Preferred Stock: Ten thousand shares of preferred stock are outstanding with a $9 annual dividend and a $100 face value. Today the shares are selling to yield a 10% return.

Common equity: 150 thousand shares of common stock are outstanding at a current market price of $30 per share.

Develop the firm's market value based on capital structure.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a... Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...