a if the company raises the funding with equity what will be its times interested earned ratio? what will be times burden covered ratio? what will be earnings per share? b. if the company raises the funding with debt, what will be its time interested earned ratio? what will be its times burden covered ratio? what will be its earnings per share? c which option would you suggest doug pursue? why?

Formulas Data Review View Developer Tell me what you want to do... Cut Arial 12 -A A Le Wrap Text Percentage Accents Accento ormat Painter BIU- Merge & Center - $ 96 - Conditional Format as Currency [0] Formatting Table Percent ard Font Alignment Number X B D F G H 1 J E Assignment 5.4 Exercises Problem 8: Impact of Financial Leverage 10 Points Pipsqueak Co. has an exciting opportunity to buy out its main local competitor for $200,000. Doug Kindle, ownerloperator of the business, calculates the combined EBIT of the merged companies would be $350,000. To pay for the acquisition, he is considering taking out a loan with his local bank, backed by his home mortgage, at an interest rate of 8%. In addition, $7500 of principal payments would be due each year. Fortunately, the company only has a small amount of existing debt, necessitating $10,000 in annual interest payments and $3000 in principal payments. However, the owner of Pipsquek's competitor has offered to instead take stock as a form of payment, rather than cash. In this case, Doug would issue shares of stock at $10 per share, and the competitor's current owner would become a part-owner in Pipsqueak Co. Doug's accountant tells him his current stock is worth about $15 per share. Doug owns all 80,000 existing shares. The company's tax rate is 21%. a) If the company raises the funding with equity, what will be its times-interested earned ratio? What will be its times-burden-covered ratio? What will be its earnings per share? b) If the company raises the funding with debt, what will be its times-interested earned ratio? What will be its times-burden-covered ratio? What will be its earnings per share? c) Which option would you suggest Doug pursue? Why? Create your Original Solution Below - Be sure to show all calculations and clearly indicate answers. Input Area