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Examine the following book-value balance sheet for University Products, Inc. The preferred stock currently sells...

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Accounting

Examine the following book-value balance sheet for University Products, Inc. The preferred stock currently sells for $12 per share and the common stock for $16 per share.

BOOK VALUE BALANCE SHEET (all values in millions)
Assets Liabilities and Net Worth
Cash and short-term securities $ 1.0 Bonds, coupon = 6%, paid annually (maturity = 10 years, current yield to maturity = 7%) $ 5.0
Accounts receivable 3.0 Preferred stock (par value $10 per share) 2.0
Inventories 7.0 Common stock (par value $0.2) 0.2
Plant and equipment 21.0 Additional paid-in stockholders

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