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    book-value balance sheet for University Products, Inc

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    Examine the following book-value balance sheet for University Products, Inc. What is the capital structure of the firm based on market value? The preferred stock currently sells for $15 per share and the common stock for $20 per share. There are one million common shares outstanding.

    (all values in millions)

    Assets Liabilities and Net Worth
    Cash and short-term securities $1 Bonds, coupon = 8% paid annually
    maturity = 10 years, yield to maturity = 9% $10.0
    Accounts receivable 3 Preferred stock (par value $20 per share) 2.0
    Common stock (par value $.10) 0.1
    Inventories 7 Additional paid in stockholders 9.9
    Plants and equipment 21 Retained earnings 10.0
    Total $32 $32.0


    Problem 11-15

    Enter formulas to calculate the capital structure in dollars.

    Capital Structure
    Dollars Percent
    Bonds FORMULA #DIV/0!
    Preferred Stock FORMULA #DIV/0!
    Common Stock FORMULA #DIV/0!
    Total $0 #DIV/0!

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    Solution Summary

    The solution examines the book-value balance sheet for University Products, Inc.