Long-term debt financing-new long-term debt

Assignment Help Financial Management

Reference no: EM13849219

At year-end 2015, Wallace Landscaping’s total assets were $1.9 million and its accounts payable were $440,000. Sales, which in 2015 were $2.7 million, are expected to increase by 30% in 2016. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $400,000 in 2015, and retained earnings were $230,000. Wallace has arranged to sell $140,000 of new common stock in 2016 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2016. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 3%, and 45% of earnings will be paid out as dividends.

How much new long-term debt financing will be needed in 2016? (Hint: AFN - New stock = New long-term debt.) Round your answer to the nearest dollar. Do not round intermediate calculations.

Reference no: EM13849219

Questions Cloud

What effect would the signal source impedance : What effect would the signal source impedance have on the non-inverting amplifier?

Investment policy-how much will you pay for the policy : The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $31,000 per year forever. If the required return on this investment is 6.3 percent, how much will you pay for the policy?

Explain why database integrity constraints are important : Explain why database integrity constraints are important to ensure data quality and list the types of constraints that can be used with a relational database.

Description of a company governance system : Find a description of a company's governance system and post a brief description with a link. Do you agree or disagree that your current or previous employer executed the governance system as stated

Long-term debt financing-new long-term debt : At year-end 2015, Wallace Landscaping’s total assets were $1.9 million and its accounts payable were $440,000. Sales, which in 2015 were $2.7 million, are expected to increase by 30% in 2016. Total assets and accounts payable are proportional to sale..

Develop an action plan identifying key tasksand : Develop an action plan identifying key tasksand / or processes involved in changing from Windows 7 to Windows 10 and how they will change

Management prefers to get the server with the os : Management prefers to get the server with the OS already installed and wants to keep management tasks as simple as possible. which windows server 2012/r2 edition do you recommend? explain your answer please ?

A firm wishes to maintain an internal growth rate : A firm wishes to maintain an internal growth rate of 9 percent and a dividend payout ratio of 25 percent. The current profit margin is 9 percent, and the firm uses no external financing sources. What must total asset turnover be? Round your answer to..

A program to simulate a cash register change calculator : Write a program to simulate a cash register change calculator. Assume that you have two double variables that have been declared and initialized with some values: cost and amtPaid. Assume that amtPaid is greater than or equal to cost.

User Account

All Pages