Question

Parker Inc. is obligated to pay its creditors $33,333 very soon. If the market value of the firm's assets equals $49,700, calculate the residual value owed to the shareholders.

Answer 1

Answer:

The market value of shareholders’ equity is $16,367

Explanation:

In this question, we are asked to calculate the residual value owed to shareholders.

We proceed as follows:

Firstly, we identify the following;

Amount payable to creditors = $33,333

Market value of assets = $49,700

Mathematically,

Market value of shareholders equity = Market value of assets - Amount payable to creditors = $49,700 - $33,333 = $16,367