INTERMEDIATE FINAN...-MINDTAP(1 TERM)
INTERMEDIATE FINAN...-MINDTAP(1 TERM)
14th Edition
ISBN: 9780357516720
Author: Brigham
Publisher: CENGAGE L
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Chapter 18, Problem 10MC
Summary Introduction

Case summary:

Restaurant R, a family-owned restaurant chain based in Country A, has grown to the point where it is feasible to expand across the entire Southeast. The planned expansion would allow the company to raise new capital of approximately $18.3 million. The family would like to sell common stock to the public to collect the $18.3 million because Restaurant R's already has a debt ratio of 50 percent and because family members already have all their personal wealth invested in the company. The family, however, wants to retain power over voting.

To discuss: The roadshow and book-building.

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At year-end 2019, Wallace Landscaping’s total assets were $2.30 million, and its accounts payable were $430,000. Sales, which in 2019 were $2.9 million, are expected to increase by 20% in 2020. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $630,000 in 2019, and retained earnings were $330,000. Wallace has arranged to sell $180,000 of new common stock in 2020 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2020. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 5%, and 50% of earnings will be paid out as dividends. What was Wallace's total long-term debt in 2019? Round your answer to the nearest dollar. $   What were Wallace's total liabilities in…
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Smiley Corporation's current sales and partial balance sheet are shown below.     This year Sales   $ 10,000   Balance Sheet: Liabilities         Accounts payable   $ 2,000   Notes payable   $ 2,000   Accruals   $ 1,400       Total current liabilities   $ 5,400   Long-term bonds   $ 2,000       Total liabilities   $ 7,400   Common stock   $ 1,000   Retained earnings   $ 2,500       Total common equity   $ 3,500     Total liabilities & equity   $ 10,900     Sales are expected to grow by 8% next year. Assuming no change in operations from this year to next year, what are the projected spontaneous liabilities? Do not round intermediate calculations. Round your answer to the nearest dollar.
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