As the chief financial officer of Adirondack Designs, you have the following information: Next year's expected net income after tax but before new financing Sinking-fund payments due next year on the existing debt Interest due next year on the existing debt Common stock price, per share Common shares outstanding Company tax rate $ 53 million $ 28 million $ 23 million $ 34.5 33 million 45% a. Calculate Adirondack's times-interest-earned ratio for next year assuming the firm raises $63 million of new debt at an interest rate of 5 percent. b. Calculate Adirondack's times-burden-covered ratio for next year assuming annual sinking-fund payments on the new debt will equal $2.0 million. a. Times interest earned b. Times burden covered c. Earnings per share c. Calculate next year's earnings per share assuming Adirondack raises the $63 million of new debt. d. Calculate next year's times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells 2.8 million new shares at $20 a share instead of raising new debt. Note: Do not round intermediate calculations. Round "Earnings per share" answers to 2 decimal places and other answers to 1 decimal place.
As the chief financial officer of Adirondack Designs, you have the following information: Next year's expected net income after tax but before new financing Sinking-fund payments due next year on the existing debt Interest due next year on the existing debt Common stock price, per share Common shares outstanding Company tax rate $ 53 million $ 28 million $ 23 million $ 34.5 33 million 45% a. Calculate Adirondack's times-interest-earned ratio for next year assuming the firm raises $63 million of new debt at an interest rate of 5 percent. b. Calculate Adirondack's times-burden-covered ratio for next year assuming annual sinking-fund payments on the new debt will equal $2.0 million. a. Times interest earned b. Times burden covered c. Earnings per share c. Calculate next year's earnings per share assuming Adirondack raises the $63 million of new debt. d. Calculate next year's times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells 2.8 million new shares at $20 a share instead of raising new debt. Note: Do not round intermediate calculations. Round "Earnings per share" answers to 2 decimal places and other answers to 1 decimal place.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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