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As the financial vice president for Mzansi Media, you have the following information Expected net income after tax next year before new financing R50 million
As the financial vice president for Mzansi Media, you have the following information
Expected net income after tax next year before new financing R50 million
Sinking fund payment due next year on existing debt R17 million
Interest due next year on existing debt R18 million
Tax 35%
Common stock price, per share R25
Common shares outstanding 20 million
- Calculate Mzansis times-interest-earned ratio for next year assuming the firm raises R50 million of new debts at an interest rate of 7% (2 marks)
- Calculate Mzansis times burden covered ratio for the next year assuming annual sinking fund payments on the new debt will be equal to R8 million. (2 marks)
- Calculate next years earnings per share assuming Mzansi raises the R50 million of new debt. (1 mark)
- Calculate next years time-interest-earned ratio, times-burden-covered ratio, and earnings per share if Mzansi sells 2 million new shares at R20 a share instead of raising new debt. (3 marks)
- it is not MCQ
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