Your company's summarized financial information for the beginning and projected end of the current year is as follows: Beginning of the Year $90,000 30,000 60,000 End of the Year (projected) $100,000 30,000 70,000 15,000 Assets Liabilities Equity Net Income Your company is considering issuing 30 bonds at the end of the year (December 31st). The bonds will pay 8% interest semi-annually for 10 years and the market rate for similar bonds is 5%. Therefore, the total bond proceeds are $37,015.12. Calculate the following ratios with and without the bond issue. Review question: how much did the company pay in dividends this year (if any)? The company did not issue or repurchase any stock during the year. Without Bond Issue If Bonds are Issued 2 ROA= ROE= Debt Ratio= D/E= Dividends= 10
Your company's summarized financial information for the beginning and projected end of the current year is as follows: Beginning of the Year $90,000 30,000 60,000 End of the Year (projected) $100,000 30,000 70,000 15,000 Assets Liabilities Equity Net Income Your company is considering issuing 30 bonds at the end of the year (December 31st). The bonds will pay 8% interest semi-annually for 10 years and the market rate for similar bonds is 5%. Therefore, the total bond proceeds are $37,015.12. Calculate the following ratios with and without the bond issue. Review question: how much did the company pay in dividends this year (if any)? The company did not issue or repurchase any stock during the year. Without Bond Issue If Bonds are Issued 2 ROA= ROE= Debt Ratio= D/E= Dividends= 10
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Your company's summarized financial information for the beginning and projected end of the current year is as follows:
Beginning of the Year
$90,000
30,000
60,000
End of the Year (projected)
$100,000
30,000
70,000
15,000
Assets
Liabilities
Equity
Net Income
Your company is considering issuing 30 bonds at the end of the year (December 31st). The bonds will pay 8% interest semi-annually
for 10 years and the market rate for similar bonds is 5%. Therefore, the total bond proceeds are $37,015.12. Calculate the following
ratios with and without the bond issue.
Review question: how much did the company pay in dividends this year (if any)? The company did not issue or repurchase any stock
during the year.
Without Bond
Issue
If Bonds are
Issued
2
ROA=
ROE=
Debt Ratio=
D/E=
Dividends=
10
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