Examine book-value balance sheet for university products inc

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Examine the following book-value balance sheet for University Products, Inc. What is the capital structure of the firm on the basis of market values? The preferred stock currently sells for $15 per share and the common stock for $20 per share. There are 1 million common shares outstanding.

Book Value Balance Sheet

(all values in millions)

Cash and short-term securities

$1

Bonds, coupon= 8%, paid annually (maturity= 10years, current yield to maturity =9%)

$10.0

Accounts receivable     

3

Preferred stock (par value $20   per share)

2.0

Inventories

7

Common stock (par value $.10)  

.1

Plant and equipment   

21

Additional paid-in stockholders'  

9.9

 


capital Retained Earnings    

10.0

Total

$32

Total

32.0

Reference no: EM131332668

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