kirk is considering the construction of a new facility in Oklahoma. The facility will cost Newkirk $500 million capital. The firm is considering a target debt-to-equity ratio of 0.25 for this project. Newkirk has two financing options: 1) corporate financing, where the debt capital needed comes from corporate debt; or 2) project financing, through nonrecourse debt of the new entity Oklahoma Plan. The company current has total assets of $1,800 million, including $800 million of debt and $1,000 million of equity. Prepare abbreviated balance sheets for the following: a. Newkirk before the investment facility b. Newkirk after the investment of the facility if corporate financing is used c. Newkirk and the Oklahoma Plant, if project financing is
kirk is considering the construction of a new facility in Oklahoma. The facility will cost Newkirk $500 million capital. The firm is considering a target debt-to-equity ratio of 0.25 for this project. Newkirk has two financing options: 1) corporate financing, where the debt capital needed comes from corporate debt; or 2) project financing, through nonrecourse debt of the new entity Oklahoma Plan. The company current has total assets of $1,800 million, including $800 million of debt and $1,000 million of equity. Prepare abbreviated balance sheets for the following: a. Newkirk before the investment facility b. Newkirk after the investment of the facility if corporate financing is used c. Newkirk and the Oklahoma Plant, if project financing is
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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Newkirk is considering the construction of a new facility in Oklahoma. The facility will cost Newkirk $500 million capital. The firm is considering a target debt-to-equity ratio of 0.25 for this project. Newkirk has two financing options: 1) corporate financing , where the debt capital needed comes from corporate debt; or 2) project financing, through nonrecourse debt of the new entity Oklahoma Plan. The company current has total assets of $1,800 million, including $800 million of debt and $1,000 million of equity. Prepare abbreviated balance sheets for the following:
a. Newkirk before the investment facility
b. Newkirk after the investment of the facility if corporate financing is used
c. Newkirk and the Oklahoma Plant, if project financing is used
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