What will be the long-term debt for the projected year

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Reference no: EM131985074

These are the simplified financial statements for Johns Car Rental.

Income statement	Current	Projected
Sales	na	1,000
Costs	na	700
Profit before tax	na	300
Taxes	na	90
Net income	na	210
Dividends	na	63

Balance sheets	Current	Projected
Current assets	100	115
Net fixed assets	900	1,080
Current liabilities	70	81
Long-term debt 400
Common stock 300
Retained earnings 230

a. What is Johns' projected addition to retained earnings under this plan? Explain

b. If John does not plan on issuing new stock and will finance any shortfall by issuing additional long-term debt what will be the Long-term debt for the projected year (including the additional financing)? Explain

Reference no: EM131985074

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