The current market value of the assets of ABC,Inc. is $86 million. The market value of the equity is $43.28 million. What is the market value of the firm's debt?
A) Cannot be determined from the information given.
B) $21.36 million
C) $42.72 million
D) $64.08 million
E) $129.28 million

Question

Quizplus · Accepted Answer

Market value of firm's assets = $86 million
Market value of the equity = $43.28 million

Market value of debt = Market value of assets – Market value of equity
Debt = $86 million – $43.28 million
Debt = $42.72 million

Therefore, the answer is C) $42.72 million.

The Current Market Value of the Assets of ABC,Inc