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# Capital Structure of the firm based on market values

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

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Step 1) Calculate the current mkt price of bonds and then find the mkt value of all the bonds

To calculate the price of the bond we need to calculate / read from tables the values of
PVIF= Present Value Interest Factor
PVIFA= Present Value Interest Factor for an Annuity
Price of bond= PVIF * Redemption value + PVIFA * interest payment per period

PVIFA( n, r%)= =[1-1/(1+r%)^n]/r%
PVIF( n, r%)= =1/(1+r%)^n

Price ...

#### Solution Summary

The solution calculates the market value weights of common stock, preferred stock, bonds.

\$2.49