Please need answer the general accounting question Wagner Industrial Motors, which is currently operating at full capacity, has salesof $2,450, current assets of $790, current liabilities of $480, net fixed assets of$1,640, and a 5 percent profit margin. The firm has no long-term debt and doesnot plan on acquiring any. The firm does not pay any dividends. Sales are expectedto increase by 10 percent next year. If all assets, short-term liabilities, and costsvary directly with sales, how much additional equity financing is required for nextyear?a. $12.25b. $245.00c. $257.25d. $182.75e. $60.25

Step 1: Define Equity FinancingEquity financing is considered for the new issue of shares or any new…

Answered: Wagner Industrial Motors, which is…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 7P

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Wagner Industrial Motors, which is currently operating at full capacity, has sales of $2,340, current assets of $680, current liabilities of $370, net fixed assets of $1,530, and a 5 percent profit margin. The firm has no long-term debt and does not plan on acquiring any. The firm does not pay any dividends. Sales are expected to increase by 10 percent next year. If all assets, short-term liabilities, and costs vary directly with sales, how much additional equity financing is required for next year? $172.30 $245.70 $234.00 $55.30 $11.70
Signature Corporation, which is currently operating at full capacity, has sales of $75,000, current assets of $4,500, current liabilities of $3,200, net fixed assets of $55,500, and a 10 percent profit margin. The firm has no long-term debt and does not plan on acquiring any. The firm does not pay any dividends. Sales are expected to increase by 8.5 percent next year. If all assets, short-term liabilities, and costs vary directly with sales, how much is the external financing need (EFN) for next year? O a. -$2,099.5 O b. -$3,309.5 O c. $4,201 O d. $5,914
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Fujita, Incorporated, has no debt outstanding and a total market value of $220,000. Earnings before interest and taxes, EBIT, are projected to be $26,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 15 percent higher. If there is a recession, then EBIT will be 20 percent lower. The company is considering a $120,000 debt issue with an interest rate of 8 percent. The proceeds will be used to repurchase shares of stock. There are currently 11,000 shares outstanding. Ignore taxes for this problem. a-1. Calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) a-2. Calculate the percentage changes in EPS when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2…
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