Examine the following book-value balance sheet for University Products, Inc. The preferred stock currently sells for $10 per share and the common stock for $20 per share.
BOOK VALUE BALANCE SHEET
(all values in millions) Assets Liabilities and Net Worth Cash and short-term securities $ 2.0 Bonds, coupon = 5%, paid annually
(maturity = 10 years, current yield to
maturity = 6%) $ 10.0 Accounts receivable 6.0 Preferred stock (par value $10 per
share) 2.0 Inventories 10.0 Common stock (par value $0.2) 0.1 Plant and equipment 23.0 Additional paid-in stockholders
Examine the following book-value balance sheet for University Products, Inc. The preferred stock currently sells for $10 per share and the common stock for $20 per share.
| BOOK VALUE BALANCE SHEET (all values in millions) | |||||
| Assets | Liabilities and Net Worth | ||||
| Cash and short-term securities | $ | 2.0 | Bonds, coupon = 5%, paid annually (maturity = 10 years, current yield to maturity = 6%) | $ | 10.0 |
| Accounts receivable | 6.0 | Preferred stock (par value $10 per share) | 2.0 | ||
| Inventories | 10.0 | Common stock (par value $0.2) | 0.1 | ||
| Plant and equipment | 23.0 | Additional paid-in stockholders | |||
Related questions
Examine the following book-value balance sheet for University Products Inc. The preferred stock currently sells for $30 per share and pays a dividend of $3 a share. The common stock sells for $16 per share and has a beta of .6. There are 3 million common shares outstanding. The market risk premium is 10%, the risk-free rate is 6%, and the firmâs tax rate is 40%.
| BOOK-VALUE BALANCE SHEET | |||||||
| (Figures in $ millions) | |||||||
| Assets | Liabilities and Net Worth | ||||||
| Cash and short-term securities | $ | 1.0 | Bonds, coupon = 7%, paid annually (maturity = 10 years, current yield to maturity = 8%) | $ | 10.0 | ||
| Accounts receivable | 5.0 | Preferred stock (par value $10 per share) | 3.0 | ||||
| Inventories | 9.0 | Common stock (par value $.10) | .3 | ||||
| Plant and equipment | 20.0 | Additional paid-in stockholdersâ equity | 11.7 | ||||
| Retained earnings | 10.0 | ||||||
| Total | $ | 35.0 | Total | $ | 35.0 | ||
| What is the market debt-to-value ratio of the firm? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) |
| Market debt ratio | % |
| b. | What is Universityâs WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) |
| WACC | % |
***I've asked this same question twice already and each have been wrong. Can anyone help, please? Thank you!!!!!****
| Examine the following book-value balance sheet for University Products Inc. The preferred stock currently sells for $30 per share and pays a dividend of $3 a share. The common stock sells for $20 per share and has a beta of .7. There are 2 million common shares outstanding. The market risk premium is 10%, the risk-free rate is 6%, and the firmâs tax rate is 40%. |
| BOOK-VALUE BALANCE SHEET | |||||||
| (Figures in $ millions) | |||||||
| Assets | Liabilities and Net Worth | ||||||
| Cash and short-term securities | $ | 1.0 | Bonds, coupon = 7%, paid annually (maturity = 10 years, current yield to maturity = 8%) | $ | 5.0 | ||
| Accounts receivable | 4.0 | Preferred stock (par value $10 per share) | 3.0 | ||||
| Inventories | 8.0 | Common stock (par value $.10) | .2 | ||||
| Plant and equipment | 24.0 | Additional paid-in stockholdersâ equity | 17.8 | ||||
| Retained earnings | 11.0 | ||||||
| Total | $ | 37.0 | Total | $ | 37.0 | ||
| a. | What is the market debt-to-value ratio of the firm? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) |
| Market debt ratio | % |
| b. | What is Universityâs WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) |
| WACC | % |
