Question

Stryder, Inc. has 3 million shares outstanding at a current price of $15 per share. The book value of the shares is $10 per share. The firm also has $30 million (based on par value) in bonds outstanding. The bonds are selling at a price equal to 101 percent of par. What is the market value of the firm?

Answer 1

$75.3 million

Step-by-step explanation:

Data provided in the question:

Shares outstanding = 3 million

Current price = $15 per share

Value of Bonds = $30 million

Selling price of bonds = 101% of par

Now,

Market Value of the firm = Market Value of shares + Market Value of bonds

or

Market Value of the firm = ( 3 million × $15 ) + ( $30 million × 101% )

or

Market Value of the firm = $ 45 million + $30.3 million

or

Market Value of the firm = $75.3 million