Newkirk before the investment of the facility

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Newkirk is considering the construction of a new facility in Oklahoma. The facility will cost Newkirk $500 million capital. The firm is considering a target debt-to-equity ratio of 0.25 for this project. Newkirk has two financing options: 1) corporate financing, where the debt capital needed comes from corporate debt; or 2) project financing, through nonrecourse debt of the new entity Oklahoma Plant. The company currently has total assets of $1,800 million, including $800 million of debt and $1,000 million of equity. Make abbreviated balance sheets for the following:

1. Newkirk before the investment of the facility;

2. Newkirk after the investment of the facility if corporate financing is used;

3. Newkirk and the Oklahoma Plant, if project financing is used.

Reference no: EM133305477

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