Problem 11.1 KneeMan Markup Company has total debt obligations with book and mar
ID: 2658108 • Letter: P
Question
Problem 11.1 KneeMan Markup Company has total debt obligations with book and market values equal to $28 million and $24 million, respectively. It also has total equity with book and market values equal to $30 million and $70 million, respectively. If you were going to buy all of the assets of KneeMan Markup today, how much should you be willing to pay?Problem 11.1 KneeMan Markup Company has total debt obligations with book and market values equal to $28 million and $24 million, respectively. It also has total equity with book and market values equal to $30 million and $70 million, respectively. If you were going to buy all of the assets of KneeMan Markup today, how much should you be willing to pay?
Problem 11.1 KneeMan Markup Company has total debt obligations with book and market values equal to $28 million and $24 million, respectively. It also has total equity with book and market values equal to $30 million and $70 million, respectively. If you were going to buy all of the assets of KneeMan Markup today, how much should you be willing to pay?
Explanation / Answer
The price you should be willing to pay is the market value of assets.
Therefore price = market value of debt + market value of equity
Therefore price = 24,000,000 + 70,000,000
Therefore price = $94,000,000 or 94 million