Examine the following book-value balance sheet for University Products, Inc. The

Question

Examine the following book-value balance sheet for University Products, Inc. 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) Assets Cash and short-term securities $ 1.0 Accounts receivable 3.0 Inventories 7.0 Plant and equipment 21.0 Total $ 32.0 Liabilities and Net Worth Bonds, coupon = 8%, paid annually (maturity = 10 years, current yield to maturity = 9%) $ 10.0 Preferred stock (par value $20 per share) 2.0 Common stock (par value $.10) .1 Additional paid-in stockholders

Explanation / Answer

Hi, Please find the answer as follows: Bonds 10000000 (32%) Preferred Stock 1500000 (5%) Common Stock 20000000 (63%) Total 31500000 (100%) Thanks, Aman

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