Examine the following book-value balance sheet for University Products Inc. The preferred stock currently sells for $15 per share and pays a ... 1 answer · 0 votes: Answer:a. What is the market debt-to-value ratio of the firm? 18.45%b. What is
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Examine the following book-value balance sheet for University Products Inc. The preferred stock currently sells for $15 per share and pays a dividend of $3 a share. The common stock sells for $20 per share and has a beta of 0.7. There are 2 million common shares outstanding. The market risk premium is 12%, the risk-free rate is 8%, and the firm’s tax rate is 21%.
BOOK-VALUE BALANCE SHEET(Figures in $ millions)AssetsLiabilities and Net WorthCash and short-term securities$1.0Bonds, coupon = 6%, paid annually
(maturity = 10 years, current yield to maturity = 8%)$15.0Accounts receivable4.0Preferred stock (par value $20 per share)3.0Inventories8.0Common stock (par value $0.10)0.2Plant and equipment24.0Additional paid-in stockholders’ equity10.8 Retained earnings8.0Total$37.0Total$37.0
a. What is the market debt-to-value ratio of the firm? I know the answer for this part which is 23.51%