company has an option of financing by way of either an equity issue (new shares), by selling shares at $50 per share or through a bond issue (debt financing) bearing an annual interest of 9%. The company's current capital structure comsists of $20,000,000 in debt bearing 8% interest and $25,000,000 in equity. New capital injection will increase company's operating profits by 15%. Part 1: (6 marks) Calculate for each option the debt ratio, number of shares, EPS, ROE, ROA and TIE (Times Interest Earned). Show your calculations in the answer sheet. Part 2: (6 marks) Discuss the pros and cons of each financing option with respect to your calculations. Which option should the company choose in light of your discussion and findings. your calculations. Which option should the company choose in light of your discussion and findings. Levered (1) Company Inc intends to raise $5 million for plant expansion. The company has an option of financing by way of either an equity issue (new shares), by selling shares at $50 per share or through a bond issue (debt financing) bearing an annual interest of 9%. The company's current capital structure consists of $20,000,000 in debt bearing 8% interest and $25,000,000 in equity. New capital injection will increase company's operating profits by 15%. Part 1: (6 marks) Calculate for each option the debt ratio, number of shares, EPS, ROE, ROA and TIE (Times Interest Earned). Show your calculations in the answer sheet. Part 2: ( 6 marks) Discuss the pros and cons of each financing option with respect to your calculations. Which option should the company choose in light of your discussion and findings. Part 2: ( 6 marks) Discuss the pros and cons of each financing option with respect to your calculations. Which option should the company choose in light of your discussion and findings. company has an option of financing by way of either an equity issue (new shares), by selling shares at $50 per share or through a bond issue (debt financing) bearing an annual interest of 9%. The company's current capital structure comsists of $20,000,000 in debt bearing 8% interest and $25,000,000 in equity. New capital injection will increase company's operating profits by 15%. Part 1: (6 marks) Calculate for each option the debt ratio, number of shares, EPS, ROE, ROA and TIE (Times Interest Earned). Show your calculations in the answer sheet. Part 2: (6 marks) Discuss the pros and cons of each financing option with respect to your calculations. Which option should the company choose in light of your discussion and findings. your calculations. Which option should the company choose in light of your discussion and findings. Levered (1) Company Inc intends to raise $5 million for plant expansion. The company has an option of financing by way of either an equity issue (new shares), by selling shares at $50 per share or through a bond issue (debt financing) bearing an annual interest of 9%. The company's current capital structure consists of $20,000,000 in debt bearing 8% interest and $25,000,000 in equity. New capital injection will increase company's operating profits by 15%. Part 1: (6 marks) Calculate for each option the debt ratio, number of shares, EPS, ROE, ROA and TIE (Times Interest Earned). Show your calculations in the answer sheet. Part 2: ( 6 marks) Discuss the pros and cons of each financing option with respect to your calculations. Which option should the company choose in light of your discussion and findings. Part 2: ( 6 marks) Discuss the pros and cons of each financing option with respect to your calculations. Which option should the company choose in light of your discussion and findings
