What is the debt-equity ratio before any choices are made

Assignment Help Financial Accounting

Reference no: EM131216246

A company having total assets of S2,350,000 and liabilities of $950,000 needed to raise 1,000000 to purchase some land for expansion. They could either borrow tihe funds using 20 year bonds or they could issue 100,000 shares of common stock at the estimated market price of s10 per share.

A. What is the debt/equity ratio before any choices are made?

B. What is the debt/equity ratio if the $1 million is borrowed using bonds?

1. Which method would you choose to raise the $1 million dollars and why? Use the debt/equity results in your answer.

2. Explain how the bond interest would affect the companies cash flow if they chose that method.

Reference no: EM131216246

Questions Cloud

Calculate the spending and the production-volume variances : Jo Publishing Company specialises in printing specialty textbooks for a small but profitable university market. Due to the high set-up costs for each batch printed, Jo Publishing holds the book requests until demand for a book is approximately 500. W..

Derive the transfer function h (z) of the lti-dt system : Derive the transfer function H (z) of the LTI-DT system described by the circuit given in Figure 2.9. Obtain the difference equation relating the input x(n) to the output y(n).

How will you present your impressions of the client : Discuss the pertinent multicultural perspectives you considered. Explain how you would prepare yourself to defend your evaluation in the court setting or to relevant third parties. Be sure to support your explanation with professional literature.

What is the debt-equity ratio before any choices are made : A company having total assets of S2,350,000 and liabilities of $950,000 needed to raise 1,000000 to purchase some land for expansion. They could either borrow tihe funds using 20 year bonds or they could issue 100,000 shares of common stock at the es..

Find the total apparent power : If a watt hour meter draws 1.5 W and 11.3 vars from a potential transformer, and 1.2 W and 1.8 vars from a current transformer, the total apparent power burden placed on the current transformer is

Research your selected case on austlii : HI6027: BUSINESS AND CORPORATIONS LAW - Advise your lecturer by email of your group members and case selected. PLEASE NOTE: Lecturer approval is required. You must NOT start on your assignment until your lecturer approves your group and case.

Accounting-segment margin and management compensation : Gantry Manufacturing is a medium-sized organization with manufacturing facilities in seven different locations around the southwestern United States. What are the implications of having the corporate office issue memos requiring the facilities to rec..

User Account

All Pages