n the year 2016 PQR Company is in need of extra funds of $900,000. It has three options (share capital, debt securities or a mix of both). Details of options available to the company are given in the following table: Description Plan 1 Plan 2 Plan 3 Preference share capital 6% 450,000 200,000 Equity Share capital (@$10) 450,000 300,000 200,000 Debentures 5% 400,000 700,000 Total Money Required 900,000 900,000 900,000 Net Income for 2016 before interest is $500,000, tax rate applicable for 2016 is 30%. Required: Based on the above Information, which option company should go with? Explain
n the year 2016 PQR Company is in need of extra funds of $900,000. It has three options (share capital, debt securities or a mix of both). Details of options available to the company are given in the following table: Description Plan 1 Plan 2 Plan 3 Preference share capital 6% 450,000 200,000 Equity Share capital (@$10) 450,000 300,000 200,000 Debentures 5% 400,000 700,000 Total Money Required 900,000 900,000 900,000 Net Income for 2016 before interest is $500,000, tax rate applicable for 2016 is 30%. Required: Based on the above Information, which option company should go with? Explain
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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n the year 2016 PQR Company is in need of extra funds of $900,000. It has three options (share capital, debt securities or a mix of both). Details of options available to the company are given in the following table:
| Description | Plan 1 | Plan 2 | Plan 3 |
|---|---|---|---|
| 450,000 | 200,000 | ||
| Equity Share capital (@$10) | 450,000 | 300,000 | 200,000 |
| Debentures 5% | 400,000 | 700,000 | |
| Total Money Required | 900,000 | 900,000 | 900,000 |
Net Income for 2016 before interest is $500,000, tax rate applicable for 2016 is 30%.
Required:
Based on the above Information, which option company should go with? Explain
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