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Condensed balance sheet for skye
$ 30.00
  Here is the condensed 2014 balance sheet for Skye Computer Company (in thousands of dollars):
                         
  CONDENSED BALANCE SHEET FOR SKYE COMPUTER COMPANY            
            BV Capital Structure MV Capital Structure      
            % incl. CL % excl. CL Dollars % excl. CL      
          2014              
  Current assets     $2,000              
  Net fixed assets   3,000              
  Total assets     $5,000              
                         
  Accounts payable and accruals $900 18.0%            
  Short-term debt   100              
  Long-term debt   1,100              
  Total debt       $1,200 24.0% 29.3% $1,200 28.2%      
  Preferred stock   250 5.0% 6.1% 300 7.1%      
  Common stock     1,300              
  Retained earnings   1,350              
  Total common equity   $2,650 53.0% 64.6% 2,750 64.7%      
  Total liabilities & equity   $5,000 100.0% 100.0% $4,250 100.0%      
                         
  Skye's earnings per share last year were $3.20. The common stock sells for $55.00, last year’s dividend (D 0) was $2.10,      
  and a flotation cost of 10% would be required to sell new common stock. Security analysts are projecting that the common      
  dividend will grow at an annual rate of 9%. Skye's preferred stock pays a dividend of $3.30 per share, and its preferred      
  stock sells for $30 per share. The firm's before-tax cost of debt is 10%, and its marginal tax rate is 35%. The firm's      
  currently outstanding 10% annual coupon rate long-term debt sells at par value. The market risk premium is 5%,      
  the risk-free rate is 6%, and Skye's beta is 1.516. The firm's total debt, which is the sum of the company's short-term      
  debt and long-term debt, equals $1.2 million.              
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