The values of debts, equity, and number of shares.

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Answer 1

Question

Chapter 13, Problem 13.26P

a)

Summary Introduction

To determine: The values of debts, equity, and number of shares.

b)

Summary Introduction

To determine: The yearly interest expenses.

c)

Summary Introduction

To determine: The Earnings per Share (EPS) for the firm at various levels of indebtedness.

Introduction:

EPS are the portion of profit that distributed among the shareholders of the company. It can be obtained by dividing earnings available to equity shareholder and the number of outstanding share.

d)

Summary Introduction

To determine: The value per share at various levels of indebtedness.

e)

Summary Introduction

To discuss: The recommendation to the board of directors of the MP Company.

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Consider the following simplified financial statements for the Yoo Corporation (assuming no income taxes): Income Statement Balance Sheet Sales Costs $ 40,000 Assets 34,160 $26,000 Debt Equity $ 7,000 19,000 Net income $ 5,840 Total $26,000 Total $26,000 The company has predicted a sales increase of 20 percent. Assume Yoo pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.) Pro forma income statement Sales Costs $ 48000 40992 Assets $ 31200 Pro forma balance sheet Debt 7000 Equity 19000 Net income $ 7008 Total $ 31200 Total 30304 What is the external financing needed? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign.) External financing needed $ 896

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Answer 2

Question

Chapter 13, Problem 13.26P

a)

Summary Introduction

To determine: The values of debts, equity, and number of shares.

b)

Summary Introduction

To determine: The yearly interest expenses.

c)

Summary Introduction

To determine: The Earnings per Share (EPS) for the firm at various levels of indebtedness.

Introduction:

EPS are the portion of profit that distributed among the shareholders of the company. It can be obtained by dividing earnings available to equity shareholder and the number of outstanding share.

d)

Summary Introduction

To determine: The value per share at various levels of indebtedness.

e)

Summary Introduction

To discuss: The recommendation to the board of directors of the MP Company.

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Answer 3

Question

Chapter 13, Problem 13.26P

a)

Summary Introduction

To determine: The values of debts, equity, and number of shares.

b)

Summary Introduction

To determine: The yearly interest expenses.

c)

Summary Introduction

To determine: The Earnings per Share (EPS) for the firm at various levels of indebtedness.

Introduction:

EPS are the portion of profit that distributed among the shareholders of the company. It can be obtained by dividing earnings available to equity shareholder and the number of outstanding share.

d)

Summary Introduction

To determine: The value per share at various levels of indebtedness.

e)

Summary Introduction

To discuss: The recommendation to the board of directors of the MP Company.

Expert Solution & Answer

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Answer 4

Question

Chapter 13, Problem 13.26P

a)

Summary Introduction

To determine: The values of debts, equity, and number of shares.

b)

Summary Introduction

To determine: The yearly interest expenses.

c)

Summary Introduction

To determine: The Earnings per Share (EPS) for the firm at various levels of indebtedness.

Introduction:

EPS are the portion of profit that distributed among the shareholders of the company. It can be obtained by dividing earnings available to equity shareholder and the number of outstanding share.

d)

Summary Introduction

To determine: The value per share at various levels of indebtedness.

e)

Summary Introduction

To discuss: The recommendation to the board of directors of the MP Company.

Expert Solution & Answer

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Answer 5

Chapter 13, Problem 13.26P

a)

Summary Introduction

To determine: The values of debts, equity, and number of shares.

b)

Summary Introduction

To determine: The yearly interest expenses.

c)

Summary Introduction

To determine: The Earnings per Share (EPS) for the firm at various levels of indebtedness.

Introduction:

EPS are the portion of profit that distributed among the shareholders of the company. It can be obtained by dividing earnings available to equity shareholder and the number of outstanding share.

d)

Summary Introduction

To determine: The value per share at various levels of indebtedness.

e)

Summary Introduction

To discuss: The recommendation to the board of directors of the MP Company.

Answer 6

Chapter 13, Problem 13.26P

a)

Summary Introduction

To determine: The values of debts, equity, and number of shares.

Answer 7

Chapter 13, Problem 13.26P

a)

Summary Introduction

To determine: The values of debts, equity, and number of shares.

Answer 8

b)

Summary Introduction

To determine: The yearly interest expenses.

Answer 9

b)

Summary Introduction

To determine: The yearly interest expenses.

Answer 10

c)

Summary Introduction

To determine: The Earnings per Share (EPS) for the firm at various levels of indebtedness.

Introduction:

EPS are the portion of profit that distributed among the shareholders of the company. It can be obtained by dividing earnings available to equity shareholder and the number of outstanding share.

Answer 11

c)

Summary Introduction

To determine: The Earnings per Share (EPS) for the firm at various levels of indebtedness.

Introduction:

EPS are the portion of profit that distributed among the shareholders of the company. It can be obtained by dividing earnings available to equity shareholder and the number of outstanding share.

Answer 12

d)

Summary Introduction

To determine: The value per share at various levels of indebtedness.

Answer 13

d)

Summary Introduction

To determine: The value per share at various levels of indebtedness.

Answer 14

e)

Summary Introduction

To discuss: The recommendation to the board of directors of the MP Company.

Answer 15

e)

Summary Introduction

To discuss: The recommendation to the board of directors of the MP Company.

Answer 16

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Answer 17

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Answer 18

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Answer 19

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The values of debts, equity, and number of shares.

To determine: The values of debts, equity, and number of shares.

To determine: The yearly interest expenses.

To determine: The Earnings per Share (EPS) for the firm at various levels of indebtedness. Introduction: EPS are the portion of profit that distributed among the shareholders of the company. It can be obtained by dividing earnings available to equity shareholder and the number of outstanding share.

To determine: The value per share at various levels of indebtedness.

To discuss: The recommendation to the board of directors of the MP Company.

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Chapter 13 Solutions