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Marina CMI [18]
3 years ago
10

"Bishop, Inc., is obligated to pay its creditors $6,500 during the year. (Leave no cells blank - be certain to enter "0" whereve

r required.) a. What is the market value of the shareholders’ equity if assets have a market value of $10,250? (Do not round intermediate calculations.) b. What is the market value of the shareholders’ equity if assets equal $5,900? (Do not round intermediate calculations.)"
Business
1 answer:
RSB [31]3 years ago
4 0

Answer:

Explanation:

It is given that there is a liability to creditors of 6,500

Total assets = Total liability + Shareholder's equity

a) Shareholder's equity = Total assets - Total liability = 10,250 - 6,500 = 3,750

b) Shareholder's equity = Total assets - Total liability = 5,900 - 6,500 = -600

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Answer:

option (C) 11.8%

Explanation:

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Preferred stock = 10%

Common stock = 60%

before-tax cost of debt = 11%

cost of preferred stock = 10.3%

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New common stock sales cost = 16%

The weighted average cost of capital for the company

marginal tax rate = 40%

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Hence.

The correct answer is option (C) 11.8%

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Answer:

The second option is the cheapest.

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Giving the following information:

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Option 1:

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