View PoliciesCurrent Attempt in ProgressPharoah Airlines is considering two alternatives for the financing of a purchase of a fleet of airplanes. These two alternatives are:1.2.Issue 91,500 shares of common stock at $30 per share. (Cash dividends have not been paid nor is the payment of anycontemplated.)Issue 7%, 10-year bonds at face value for $2,745,000.It is estimated that the company will earn $735,000 before interest and taxes as a result of this purchase. The company has anestimated tax rate of 40% and has 112,000 shares of common stock outstanding prior to the new financing.Determine the effect on net income and earnings per share for these two methods of financing. (Round earnings per share to 2 decimalplaces, e.g. 2.25.)Net incomeen10Earnings per share $Plan One Issue Stock$LAPlan Two Issue Bonds

The process by which a business issues and sells additional shares of its stock to investors is…

Answered: Current Attempt in Progress Pharoah…

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 8M

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None fine Airlines is considering two alternatives for the financing of a purchase of a fleet of airplanes. These two alternatives are: Issue 80,000 shares of common stock at $56 per share. (Cash dividends have not been paid nor is the payment of any contemplated). Issue 10%, 10-year bonds at face value for $2,700,000. It is estimated that the company will earn $950,000 before interest and taxes as a result of this Purchase. The company has an estimated tax rate of 30% and has 100,000 shares of common stock outstanding prior to the new financing. Instructions Determine the effect on net income and earnings per share for these two methods of financing. Which option is more suitable to finance the project?
Blossom Airlines is considering these two alternatives for financing the purchase of a fleet of airplanes. 1. 2. Issue 56,500 shares of common stock at $46 per share. (Cash dividends have not been paid, nor is the payment of any contemplated.) Issue 11%, 10-year bonds at face value for $2,599,000. It is estimated that the company will earn $821,000 before interest and taxes as a result of this purchase. The company has an estimated tax rate of 30% and has 96,000 shares of common stock outstanding prior to the new financing. Determine the effect on net income and earnings per share for issuing stock and issuing bonds. Assume the new shares or new bonds will be outstanding for the entire year. Start with Income Before Interest and Taxes. (Round earnings per share to 2 decimal places, e.g. $2.66. Start with Income Before Interest and Taxes.) Dividends Earnings Per Share Expenses Income Before Interest and Taxes Income Before Taxes Income Tax Expense Interest Expense Net Income / (Loss)…
Oriole Airlines is considering two alternatives for the financing of a purchase of a fleet of airplanes. These two alternatives are: 1. Issue 81,300 shares of common stock at $30 per share. (Cash dividends have not been paid nor is the payment of any contemplated.) 2. Issue 6%, 10-year bonds at face value for $2,439,000. It is estimated that the company will earn $757,500 before interest and taxes as a result of this purchase. The company has an estimated tax rate of 30% and has 106,500 shares of common stock outstanding prior to the new financing.Determine the effect on net income and earnings per share for these two methods of financing. (Round earnings per share to 2 decimal places, e.g. 2.25.) Plan One Issue Stock Plan Two Issue Bonds Net income $ $ Earnings per share $
Ivanhoe Company is considering these two alternatives for financing the purchase of a fleet of airplanes: 1. 2. Issue 52,500 shares of common stock at $44 per share. (Cash dividends have not been paid nor is the payment of any contemplated.) Issue 10%, 10-year bonds at face value for $2,310,000. It is estimated that the company will earn $809,200 before interest and taxes as a result of this purchase. The company has an estimated tax rate of 30% and has 92,000 shares of common stock outstanding prior to the new financing. Determine the effect on net income and earnings per share for (a) issuing stock and (b) issuing bonds. Assume the new shares or new bonds will be outstanding for the entire year. (Round earnings per share to 2 decimal places, e.g. 2.66.) O î (a) Plan One Issue Stock $ (b) Plan Two Issue Bonds
Gilliland Airlines is considering two alternatives for the financing of a purchase of a fleet of airplanes. These two alternatives are: 1) Issue 90,000 shares of common stock at $30 per share. (Cash dividends have not been paid nor is the payment of any contemplated.) 2) Issue 10%, 10-year bonds at face value for $2,700,000. It is estimated that the company will generate $800,000 of income before interest and taxes as a result of this purchase. The company has an estimated tax rate of 30% and has 120,000 shares of common stock outstanding prior to the new financing. Instructions Determine the effect on net income and earnings per share for these two methods of financing. Income before interest & taxes Interest expense ($2,700,000 × 10%) Income before taxes Income Tax Expense (30%) Net Income Outstanding shares Earnings per share Plan 1 - Issue Stock $ 800,000 Plan 2 - Issue Bonds $ 800,000
A 65.
Topic: Illiquidity, Synergy, Control, Book Value, Sound Value, Liquidation Value, Income Approach, and Forex Translation You are making a proposal to start a corporation that would require invested capital of P9,000,000 but will provide annual earnings of P1,500,000 every year. The capital will be from an 8%- interest, P2,500,000-face value perpetual bonds and the balance from equity requiring a rate of return of 15%. How much is the value of goodwill based on this forecast?
Cullumber Company is considering these two alternatives for financing the purchase of a fleet of airplanes. 1. Issue 63,000 shares of common stock at $48 per share. (Cash dividends have not been paid nor is the payment of any contemplated.) 2. Issue 13%, 15-year bonds at face value for $3,024,000. It is estimated that the company will earn $825,000 before interest and taxes as a result of this purchase. The company has an estimated tax rate of 40% and has 94,100 shares of common stock outstanding prior to the new financing.Determine the effect on net income and earnings per share for issuing stock and issuing bonds. Assume the new shares or new bonds will be outstanding for the entire year. (Round earnings per share to 2 decimal places, e.g. $2.66.)
Problem 2 ABM Enterprise would like to evaluate/analyze an investment proposal. Given the following: Investment amount 450,000 (2022) Dividends / Revenue stream - 100,000 for the first year and an interval of 5,000 for the succeeding years Discount rate - 14% a. NPV for the perio 2023 through 2029; b. Total NPV using manual computation; c. Total NPV using the Excel function; and d. IRR rate.
Begin with the partial model in the file Ch02 P21 Build a Model.xlsx on the textbooks Web site. a. Using the financial statements shown here for Lan Chen Technologies, calculate net operating working capital, total net operating capital, net operating profit after taxes, free cash flow, and return on invested capital for 2020. The federal-plus-state tax rate is 25%. b. Assume there were 15 million shares outstanding at the end of 2019, the year-end closing stock price was 65 per share, and the after-tax cost of capital was 10%. Calculate EVA and MVA for 2020. Lan Chen Technologies: Income Statements for Year Ending December 31 (Millions of Dollars) Lan Chen Technologies: December 31 Balance Sheets (Thousands of Dollars)

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