Russell Ltd installs and services heating and ventilation systems for commercial premises.

The business’s most recent statement of financial position and income statement are as follows:

Required:

(a) For each of the financing schemes:
1 prepare a projected income statement for next year;
2 calculate the projected earnings per share for next year;
3 calculate the projected level of gearing as at the end of next year.

(b) Briefly assess both of the financing schemes under consideration from the viewpoint of the existing shareholders.

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Statement of financial position 000 ASSETS Non-current assets Property, plant and equipment Current assets Inventories at cost Trade receivables Total assets 741.8 293.2 510.3 803.5 1,545.3