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 $15 per share. There are 1 million common shares outstanding.
BOOK VALUE BALANCE SHEET
(all values in millions) |
| Assets |
Liabilities and Net Worth |
| Cash and short-term securities |
$ |
2.0 |
Bonds, coupon = 6%, paid annually
(maturity = 10 years, current yield to
maturity = 8%) |
$ |
20.0 |
| Accounts receivable |
|
5.0 |
Preferred stock (par value $15 per
share) |
|
3.0 |
| Inventories |
|
9.0 |
Common stock (par value $0.2) |
|
0.2 |
| Plant and equipment |
|
21.0 |
Additional paid-in stockholders' equity |
|
7.8 |
|
|
|
Retained earnings |
|
6.0 |
|
|
|
|
|
|
| Total |
$ |
37.0 |
Total |
$ |
37.0 |
|
|
|
|
|
|
|
|
What is the capital structure of the firm on the basis of market values? (Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places and percentage values to 2 decimal places.)
|
| Security |
Market Value |
Percent |
| Bonds |
$ million |
% |
| Preferred stock |
million |
% |
| Common stock |
million |
% |
|
|
|
| Total |
$ million |
% |
|
|
|
|