Question

2. A delivery company purchased a bunch of new trucks three years ago for $6 million. These trucks can be sold today for $5.3 million. The delivery company's current balance sheet shows net fixed assets of $3.2 million, current liabilities of $900,000, and net working capital of $215,000. If all the current assets were sold today and converted into cash, the delivery company would receive $1.25 million. Calculate the book value of the delivery company's total assets today. (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) Book value of total assets $ Now, instead, calculate their market value. (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) Market value of total assets $

Answer 1

1. Book value of total assets

Net Fixed Assets = $3,200,000

Current Liabilities = $900,000

Net Working Capital = $215,000

Current Assets = Current Liabilities + Net Working Capital

Current Assets = $900,000 + $215,000

Current Assets = $1,115,000

Total Assets = Current Assets + Net Fixed Assets

Total Assets = $1,115,000 + $3,200,000

Total Assets = $4,315,000

2. Market value of total assets

Market Value of Current Assets = $1,250,000

Market Value of Net Fixed Assets = $5,300,000

Market Value of Total Assets = Market Value of Current Assets + Market Value of Net Fixed Assets

Market Value of Total Assets = $1,250,000 + $5,300,000

Market Value of Total Assets = $6,550,000

Answer 2

Step-by-step explanation:

a. The following can be deduced from the question:

Net Fixed Assets = $3,200,000

Current Liabilities = $900,000

Net Working Capital = $215,000

We'll then calculate the current assets which will be:

= Current Liabilities + Net Working Capital

= $900,000 + $215,000

= $1,115,000

Total Assets will then be:

= $1,115,000 + $3,200,000

= $4,315,000

b. Market Value of Current Assets = $1,250,000

Market Value of Net Fixed Assets = $5,300,000

The Market Value of Total Assets will now be:

= $1,250,000 + $5,300,000

= $6,550,000