Please provide ful details includig formula

Examine the following book-value balance sheet for University
Products, Inc. What is the capital structure of
the firm based on market value? The preferred stock currently sells
for $15 per share and the common stock for
$20 per share. There are one million common shares outstanding.						
Cash and short-term securities		$1 
		
Accounts receivable		3 
		
Inventories		7 
Plants and equipment		21 
Total		$32 


Bonds, coupon = 8% paid annually			
maturity = 10 years, yield to maturity = 9%			$10.0 
Preferred stock (par value $20 per share)			2.0 
Common stock (par value $.10)			0.1 
Additional paid in stockholders			9.9 
Retained earnings			10.0 
			$32.0 


Enter formulas to calculate the capital structure in dollars.			
			
Capital Structure			
	Dollars	Percent	
Bonds	FORMULA	#DIV/0!	
Preferred Stock	FORMULA	#DIV/0!	
Common Stock	FORMULA	#DIV/0!	
Total	$0 	#DIV/0!

First you have to calculate the current market value of the $10
million in bonds.  Their current market value has two components: the
annual interest and the value of the $10 million in returned capital
in 10 years.  Therefore, we need to compute the present value of a
uniform series and a single payment-present worth factor.  At 8%, the
annual interest equals $800,000.  The yield to maturity of 9% is the
discount rate.

The formula to calculate a uniform series-present worth factor is P =
A [(1+i)^n-1)/i(1+i)^n)].

The formula to calculate a single payment-present worth factor is P =
F [1/(1+i)^n].

Therefore, the current market value of the bonds is $800,000
[(1.09)^10 -1/0.09 (1.09)^10] + $10 million [1/(1.09)^10] or
$9,358,234.23.

The value of the common stock is equal to the one million shares
outstanding multiplied by the $20 per share or $20 million.

The number of shares of preferred stock is calculated by taking their
par value of $2 million and dividing it by $20 per share to obtain
100,000 shares.  Multiplying the 100,000 shares by their $15 per share
value equals $1,500,000.

The total market capitalization of the company is $30,858,234.23, with
30.3% in bonds, 4.9% as preferred stock, and 64.8% as common stock.

Sincerely,

Wonko

Ok, first you want the Present Value of your outstanding bonds. This
is going to be a million dollar bond with coupon payments of 8% (80000
a year) for ten years (Do an annuity). Also, you have to add in the
maturity value of the million that you receive 10 years from now. Both
of these should be discounted at the yield rate of 9%. Your answer
will be less than the million dollars because your yield rate is more
than you pay out in interest.

As for the stocks, they tell you that you have 1 million common shares
selling for $20 per share--total value of $20 million. They also tell
you that you have 2 million in your preferred stock par account, and
that you received 20 bucks per preferred share. This means that you
have 200000 shares outstanding times the cost, $15. This is $3000000.
You should be able to solve it from here. I want you to do the bond
part on your own so you are familiar with the solution.