Reference no: EM132001797
Sunburn Sunscreen has a zero coupon bond issue outstanding with a $29,000 face value that matures in one year. The current market value of the firm's assets is $30,700. The standard deviation of the return on the firm's assets is 37 percent per year.
Frostbite Thermalwear has a zero coupon bond issue outstanding with a face value of $33,000 that matures in one year. The current market value of the firm's assets is $36,400. The standard deviation of the return on the firm's assets is 43 percent per year.
Suppose Sunburn Sunscreen and Frostbite Thermalwear have decided to merge. Because the two companies have seasonal sales, the combined firm's return on assets will have a standard deviation of 21 percent per year, and the annual risk-free rate is 6 percent per year, compounded continuously.
a-1 What is the combined value of equity in the two existing companies? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Equity $
a-2 What is the combined value of debt in the two existing companies? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Debt $
b-1 What is the value of the new firm's equity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Equity $
b-2 What is the value of the new firm's debt? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Debt $
c-1 What was the gain or loss for shareholders? (A loss should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Gain/Loss $
c-2 What was the gain or loss for bondholders? (A loss should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Gain/Loss $
|
How much cash does the company have
: Sunset, Inc., has a book value of equity of $13,080. Long-term debt is $7,400. Net working capital, other than cash, is $1,890.
|
|
What universalizable moral duties are stake
: Now she is seven months pregnant and the man leaves. What is their moral issue and what universalizable moral duties are stake?
|
|
Influence the occurrence of parenticide or filicide
: How does the idea value measures of parents and children in different stages of life influence the occurrence of parenticide or filicide?
|
|
What is orgasmic reconditioning
: What is orgasmic reconditioning? What is aversive conditioning? What is masturbatory satiation?
|
|
What was the gain or loss for bondholders
: The current market value of the firm's assets is $30,700. The standard deviation of the return on the firm's assets is 37 percent per year.
|
|
Nypd recently changed their policy on a specific type
: NYPD recently changed their policy on a specific type of evidence used to prosecute sex workers, what was this policy change?
|
|
Compute the projects expected npv and irr
: The firm's annual depreciation expense is $4,900,000/5 = $980,000. The company plans to use the equipment for all 3 years of the project.
|
|
Interpret and evaluate the events from your perspective
: Reflect on how this information will be useful to you - What questions do I have? Have I changed how I think about the situation? Where do I go from here
|
|
Formulate LP that enable GladaCo to maximize daily profits
: Assuming that daily demand for each type of candle must be met, formulate an LP that will enable GladaCo to maximize daily profits
|