It is January 2nd and senior management of Baldwin meets to determine their investment plan for theyear. They decide to fully fund a plant and equipment purchase by issuing 75,000 shares of stock plus anew bond issue. Assume the stock can be issued at yesterday's stock price ($38.81) and leverage changesto 2.7. Which of the following statements are true? Select all that apply.Select 3 correct responses.The total investment for Baldwin will be $21,789,453Total liabilities will be $144,571,205Baldwin will issue stock totaling $2,910,750Total assets will rise to $226,262,208Working capital will remain the same at $12,535,228

In the event that a stock company requires additional capital, the company has the option of selling…

Answered: It is January 2nd and senior management…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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AERO Corporation was founded by Mr.Chen. At the beginning of the establishment of AERO Corporation, Mr.Chen had initial shares 10,000 pieces. Mr.Chen wants to expand his business venture with take investors to invest for 5 years. Mr.Chen estimates that if you want reached the terminal value at the end of the fifth year of $ 300,000,000, then investment funds given by investors is $ 15,000,000. Financing from investors will be done as many as two stages, where the second stage is carried out in the third year (in the third years ,second stage investors will invest their funds in AERO Corporation). First stage investors demand a rate of return of 70% while the second stage investors demand rate of return of 50%. Public information shows that competitors of AERO is "SX Corppration" has a market capitalization value of $45,000,000 and obtain net profit of $30,000,000 last year. e. Describe in the form of a pie chart the configuration of Mr.Chen's shareholding and investors as a result of…
Seattle Adventures, Incorporated, is trying to decide between the following two alternatives to finance its new $17 million gaming center: a. Issue $17 million, 6% note. b. Issue 1 million shares of common stock for $17 per share with expected annual dividends of $1.02 per share. Required: 1. Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. 2. Answer the following questions for the current year: (a) By how much are interest payments higher if issuing the note? (b) By how much are dividend payments higher by issuing stock? (c) Which alternative results in higher earnings per share?
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