5.

What's the firm's current net income? 191,954 / 255,938 / 345,516 / 422,298

What is the firm's current earnings per share? 2.43 / 4.22 / 2.94 / 2.56

How many shares of common stock will the firm have outstanding if it sells its new debt? 0 / 45,000 / 55,000 / 100,000

What will be the firm's earnings per share if it sells the new debt? 4.25 / 4.46 / 2.34 / 8.71

Rating agencies such as Standard & Poor's, Moody's Investor Services, and Fitch Ratings assign credit ratings to bonds based on both quantitative and qualitative factors. The factors used and their importance to the rating given to an individual bond issue are unique to each rating agency. The bond ratings indicate the issue's, and sometimes the issuer's, credit risk, including the risk of default. The issue's default risk rating affects its interest (coupon) rate, which in turn affects the issuer's cost of debt capita On the basis of these ratings, bonds are classified along a continuum from the higher-rated investment-grade bonds down to the lower-rated junk bonds. Which of the following bonds is more likely to be classified as an investment-grade bond? O A bond with an AA rating, a 5% yield, a sinking fund provision, and a debt ratio of 20% O A bond with a Brating, a 10% yield, a call provision, and a debt ratio of 45% Consider the bond described in the prior question. You've heard that the rating agencies have upgraded the bond's rating. The yield on the bond is likely to decrease increase