Stryder, Inc, has 3 million shares outstanding at a current price of $ 15 per sh
ID: 2726678 • Letter: S
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 in par value of bonds outstanding The bonds are selling at a price equal to 101 percent of par What is the market value of the firm? $30.0 million $45.0 million $75.0 million $75.3 million Dynamo Corp. produces annual cash flows of $150 and is expected to exist forever. The company is currently financed with 75 percent equity and 25 percent debt. Your analysts is tells you that the appropriate discount rates are 10 percent for the cash flows, and 7 percent for the debt. You currently own 7 percent of the stock. 1 low much is Dynamo worth today? $1.765 $1,500 $ 2,143 None of the above.Explanation / Answer
Q.(1) Correct answer choice is (D) $75.3 milion
Market Value of the firm = Market Value of shares + Market Value of bonds., = (3 million shares x $15) + ($30 million x 101%) = $ 45.00 m + $30.3m = $75.3million