Gawain's balance sheet for at 31/12/X1 is shown belowBuildingsEquipmentInventoryCash & Receivables£'000£'0004502,100 £1NV SharesReserves18009751,075150 10% Loan StockPayables6004003,775 Equity & Liabilities3,775AssetsAssume that new plant could have been purchased on01/01/X1 as follows:a)Buy new plant (fair value £600,000, life 6 years) from a2:9 rights issue made at a premium of 50p per share.b)Instead, lease this plant over 6 years with interest at 20%together with annual repayments of £180,000.Prepare amended balance sheets at 31/12/X1 for eachoption a) and b) above.c)Contrast Finance Leases with Operating Leases

a) Purchase new plant with rights issue:£'000£'000Buildings2,100Share Capital (1,200 +…

Answered: Gawain's balance sheet for at 31/12/X1…

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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