Question

Finance balance sheet: KneeMan Markup Company has total debt obligations with book and market values equal to $30 million and $28 million, respectively. It also has total equity with book and market values equal to $20 million and $70 million, respectively. If you were going to buy all of the assets of KneeMan Markup today, how much should you be willing to pay

Answer 1

$98 million

Step-by-step explanation:

Kneeman markup company has a total debt obligation with a book value of $30 million

The market value is $28 million

The total equity has a book value of $20 million and a market value of $70

Therefore, the price that you should be willing today can be calculated as follows

Debt obligation market value+total equity market value

= $28 million + $70 million

= $98 million

Hence the amount that you should be willing to pay today is $98 million