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What is the value of the company equity

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Buckeye Industries has a bond issue with a face value of $1,000 that is coming due in one year. The value of the company's assets is currently $1,190. Urban Meyer, the CEO, believes that the assets in the company will be worth either $960 or $1,480 in a year. The going rate on one-year T-bills is 7 percent.

a.) What is the value of the company's equity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

b.) What is the value of the debt? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Suppose the company can reconfigure its existing assets in such a way that the value in a year will be $900 or $1,700.

c.) If the current value of the assets is unchanged, what is the new value of the company's equity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Reference no: EM132705316

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