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 a. Calculate Adirondack's times-interest-earned ratio for next year assuming the firm raises $55 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 $6.0 million. Answer is not complete. c. Calculate next year's earnings per share assuming Adirondack raises the $55 million of new debt. d. Calculate next year's times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack seils 2.0 million new shares at $28 a share instead of raising new debt. a Times interest earned b. Times burden covered $45 million $ 20 million $ 15 million Note: Do not round intermediate calculations. Round "Earnings per share" answers to 2 decimal places and other answers to 1 decimal place. 5.6 2.8 A FA $ 30.5 < Prev 1 of 6 25 million 45% Next >
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 a. Calculate Adirondack's times-interest-earned ratio for next year assuming the firm raises $55 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 $6.0 million. Answer is not complete. c. Calculate next year's earnings per share assuming Adirondack raises the $55 million of new debt. d. Calculate next year's times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack seils 2.0 million new shares at $28 a share instead of raising new debt. a Times interest earned b. Times burden covered $45 million $ 20 million $ 15 million Note: Do not round intermediate calculations. Round "Earnings per share" answers to 2 decimal places and other answers to 1 decimal place. 5.6 2.8 A FA $ 30.5 < Prev 1 of 6 25 million 45% Next >
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
Problem 1PS
Related questions
Question
Ss.230.
Transcribed Image Text:Return to question
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
$6.0 million.
c. Calculate next year's earnings per share assuming Adirondack raises the $55 million of new debt.
d. Calculate next year's times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells: 2.0 million
new shares at $28 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.
Answer is not complete.
a. Times interest earned
b. Times burden covered
c. Earnings per share
d. Times interest earned
d. Times burden covered
d. Earnings per share i
$
5.6
2.8 x
2.53 x
6.2 x
2.7 x
Transcribed Image Text: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 i
Company tax rate.
a. Calculate Adirondack's times-interest-earned ratio for next year assuming the firm raises $55 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
$6.0 million.
Answer is not complete.
5.6
2.8 X
c. Calculate next year's earnings per share assuming Adirondack raises the $55 million of new debt.
d. Calculate next year's times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells 2.0 million
new shares at $28 a share instead of raising new debt.
a. Times interest earned
b. Times burden covered
Note: Do not round intermediate calculations. Round "Earnings per share" answers to 2 decimal places and other answers to 1
decimal place.
A FA
$ 45 million
$ 20 million
$ 15 million
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$ 30.5
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45%
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