1. Games Inc., which is engaged in children's toys, currently has total assets of Rp. 1 billion consisting of 8000 common shares (par value @ Rp. 100,000, -) and long-term debt of Rp. 200 million with 4% interest p.a. To develop, the company requires additional funds of Rp. 500 million, which is planned to be met by: Alternative 1: issue new common shares at market price @ Rp. 125.000,- Alternative 2: increase debt by issuing new bonds with a nominal value of Rp. 1 million, coupon of 5.5% p.a., selling
1. Games Inc., which is engaged in children's toys, currently has total assets of Rp. 1 billion consisting of 8000 common shares (par value @ Rp. 100,000, -) and long-term debt of Rp. 200 million with 4% interest p.a. To develop, the company requires additional funds of Rp. 500 million, which is planned to be met by: Alternative 1: issue new common shares at market price @ Rp. 125.000,- Alternative 2: increase debt by issuing new bonds with a nominal value of Rp. 1 million, coupon of 5.5% p.a., selling
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:1. Games Inc., which is engaged in children's toys, currently has total
assets of Rp. 1 billion consisting of 8000 common shares (par value
@ Rp. 100,000, -) and long-term debt of Rp. 200 million with 4%
interest p.a.
To develop, the company requires additional funds of Rp. 500
million, which is planned to be met by:
Alternative 1: issue new common shares at market price @ Rp.
125.000,-
Alternative 2: increase debt by issuing new bonds with a nominal
value of Rp. 1 million, coupon of 5.5% p.a., selling
rate of 125 and circulation period of 5 years.
With these additional funds, the company's EBIT will be Rp 70
million. 30% tax rate As a team in the company's finance department,
which alternative analysis is the best ?
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