Ask Question
3 April, 07:18

Brookman Inc's latest EPS was $2.75, its book value per share was $22.75, it had 275,000 shares outstanding, and its debt/total invested capital ratio was 44%. The firm finances using only debt and common equity, and its total assets equal total invested capital. How much debt was outstanding? Do not round your intermediate calculations. a. $5,013,938 b. $4,571,531 c. $5,358,031 d. $4,915,625 e. $4,768,156

+2
Answers (1)
  1. 3 April, 09:30
    0
    Outstanding debt = $4,915,625

    Explanation:

    Since the debt capital ratio 44%, then the equity / capital ratio is 56% i. e (100% - 44%)

    The total value of stock = Book value per share * outstanding capital

    = $22.75 * 275,000 = $6,256,250.

    The total value of equity = 56% * total value of assets

    $6,256,250. = 56% * y

    6,256,250/56% = y

    11,171,875 = y

    Total value of assets = $11,171,875

    Debt outstanding = debt/capital ratio * Assets

    = 44% * $11,171,875

    = $4,915,625
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Brookman Inc's latest EPS was $2.75, its book value per share was $22.75, it had 275,000 shares outstanding, and its debt/total invested ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers