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Market value of bond is higher than the face value

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XYZ Corporation has 45,000 ordinary shares outstanding which are currently selling for 110 per share. The number of preference share outstanding is 30,000 and the book value of a share is $100 while the market value is $105. Company has issued 2500 bonds with face value of 1000. The Market value of bond is higher than the face value and it is $1,100. The required rate of return of ordinary shareholders, preference shareholders and bond holders are 10%, 12% and 15% respectively. The Company is subject to 30% corporate tax.

Reference no: EM132552401

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