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31 August, 00:21

The book value of a firm's equity is $100 million and its market value of equity is $200 million. The facevalue of its debt is $50 million and its market value of debt is $60 million. What is the market value of assetsof the firm? A) $150 million B) $250 million C) $160 millionD) $260 million

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  1. 31 August, 00:50
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    D) $260 million

    Explanation:

    Using the accounting equation which states that

    Assets = shareholder's equity + liabilities

    Market value of assets = market value of equity + market value of debt (liabilities)

    Market value of equity = $200 million

    Market value of debt = $60 million

    Market value of assets = $200 million + $60 million

    = $260 million

    The right option is D) $260 million
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