Given the following information, what is the market value of XYZ Corporation? Common stock 13.6 million shares outstanding, selling at $31 per shareBond issue 1 $600 million total face value, selling at 98 percent of parBond issue 2 $150 million total face value, selling at $950 per bondA) $697.52 millionB) $874.82 millionC) $987.24 millionD) $1,049.43 millionE) $1,152.10 million

Question

Business

Floyd

26 July, 11:12

Given the following information, what is the market value of XYZ Corporation? Common stock 13.6 million shares outstanding, selling at $31 per shareBond issue 1 $600 million total face value, selling at 98 percent of parBond issue 2 $150 million total face value, selling at $950 per bondA) $697.52 millionB) $874.82 millionC) $987.24 millionD) $1,049.43 millionE) $1,152.10 million

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Answers (1)

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Rock · Answer 1

option (E) $1,152.10 million

Explanation:

Data provided in the question:

outstanding Common stock = 13.6 million shares

Selling price = $31 per share

Total face value of bond Issue 1 = $600 million

selling at 98% of par

Total face value of bond Issue 2 = $150 million

selling at $950 per bond

Now,

Shareholder's equity = Share selling price * number of shares outstanding

= $31 * 13.6 million

= $421.60 million

Value of bond 1 = Total face value * price %

= $600 million * 98%

= $588 million

Value of bond 2 = (Total face value * price) : 1000

= ($150 million * 950) : 1000

= $142.50 million

Therefore,

Market value of firm = $421.60 million + $588 million + $142.50 million

= $1,152.10 million

Hence,

The correct answer is option (E) $1,152.10 million