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. $ 51 million $ 26 million $ 21 million a. Calculate Adirondack's times-interest-earned ratio for next year assuming the firm raises $61 million of new debt at an interest rate of 2 percent. b. Calculate Adirondack's times-burden-covered ratio for next year assuming annual sinking-fund payments on the new debt will equal $3.0 million. a Times interest earned b. Times burden covered c. Eamings per share d. Times interest earned d. Times burden covered d. Eamings per share $ 33.5 c. Calculate next year's earnings per share assuming Adirondack raises the $61 million of new debt. d. Calculate next year's times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells 2.6 million new shares at $22 a share instead of raising new debt. $ 31 million 35% Note: Do not round intermediate calculations. Round "Earnings per share" answers to 2 decimal places and other answers to 1 decimal place. 4.2 3.7 1.07 3.4 3.0
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. $ 51 million $ 26 million $ 21 million a. Calculate Adirondack's times-interest-earned ratio for next year assuming the firm raises $61 million of new debt at an interest rate of 2 percent. b. Calculate Adirondack's times-burden-covered ratio for next year assuming annual sinking-fund payments on the new debt will equal $3.0 million. a Times interest earned b. Times burden covered c. Eamings per share d. Times interest earned d. Times burden covered d. Eamings per share $ 33.5 c. Calculate next year's earnings per share assuming Adirondack raises the $61 million of new debt. d. Calculate next year's times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells 2.6 million new shares at $22 a share instead of raising new debt. $ 31 million 35% Note: Do not round intermediate calculations. Round "Earnings per share" answers to 2 decimal places and other answers to 1 decimal place. 4.2 3.7 1.07 3.4 3.0
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
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22.As the chief financial officer of Adirondack Designs, you have the following information- Next year's expected net incone after tax but before new financing Sinking-fund paynents due next year on the existing debt interest due next year on the existing debt Common stock price, per share comnon shares outstanding company tax rate ( 51 nituion 5 26 million 521 nition 533.5 31 mition35ka. Coiculate Adirondack's times-interest-earned ratio for next year assuming the firm raises$61million of new debt at an interest rate of 2 percent. b. Calculote Adirondack's times-burden-covered ratio for next year assuming annual sinking-fund poyments on the new debt wil equal$3.0milion. c. Calculate next year's earnings per share assuming Adirondack raises the$61millon of new debt. d. Calculate next year's times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells 2.6 million new shares at$22a share instead of raising new debt Note: Do not round intermediate calculotions. Round "Earnings per share" answers to 2 decimal places and other answers to 1 decimal place.
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
Company tax rate
a. Calculate Adirondack's times-interest-earned ratio for next year assuming the firm raises $61 million of new debt at an interest rate
of 2 percent.
b. Calculate Adirondack's times-burden-covered ratio for next year assuming annual sinking-fund payments on the new debt will equal
$3.0 million.
a Times interest earned
b. Times burden covered
c. Eamings per share
d. Times interest earned
d. Times burden covered
d. Eamings per share
$ 51 million
$ 26 million
$ 21 million
c. Calculate next year's earnings per share assuming Adirondack raises the $61 million of new debt
d. Calculate next year's times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells 2.6 million
new shares at $22 a share instead of raising new debt.
$
$ 33.5
Note: Do not round intermediate calculations. Round "Earnings per share" answers to 2 decimal places and other answers to 1
decimal place.
4.2
3.7
1.07
31 million
35%
3.4
3.0
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