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?

Question

Quizplus · Accepted Answer

To calculate the market value of the firm, we need to add the market value of equity (3 million shares × $15 per share = $45 million) to the market value of debt (30 million × 101% = $30.3 million).

Market value of firm = Market value of equity + Market value of debt
Market value of firm = $45 million + $30.3 million
Market value of firm = $75.3 million

Therefore, Choice D is the correct answer.