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Currently the firm has 1 million shares outstanding, each sells for $20, total worth of shares: $20 million Currently firm has assets (buidings, equipment, patents
Currently the firm has 1 million shares outstanding, each sells for $20, total worth of shares: $20 million | |||||||||||||||
Currently firm has assets (buidings, equipment, patents etc) worth $20 million. All financed by shares (called equity) and no debt. | |||||||||||||||
The firm has an investment project requiring $10 million. There are 3 financing plans: all new equity, half & half, all debt | |||||||||||||||
Fill in the YELLOW cells assuming the economy does POORLY and the firm realizes a 4% return on assets (ROA=0.04) | |||||||||||||||
ROA= | 0,04 | FNANCNG PACKAGE | FNANCNG PACKAGE | interest rate on debt | |||||||||||
1 | 2 | 3 | 1 | 2 | 3 | 0,1 | 10% | ||||||||
Operating Earnings in millions | $1,20 | $1,20 | $1,20 | Assets in millions | $30,00 | $30,00 | $30,00 | ||||||||
interest expense in millions | $0,00 | Debt | $0,00 | ||||||||||||
Earnings for owners in millions | $1,2 | Equity | $30,00 | ||||||||||||
Number of shares in millions | # of shares in millions | ||||||||||||||
Earnings per share EPS | Debt/Equity Ratio | ||||||||||||||
Debt/Assets Ratio |
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