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(Debt- maturity mix) A company has $25 million current saaets, and another $25 million of noncurrent assets. II forecasts an EBIT of S5 million and
(Debt- maturity mix) A company has $25 million current saaets, and another $25 million of noncurrent assets. II forecasts an EBIT of S5 million and is in the 35^ income tax bracket. Currently the yield curve is normal Kink, notes carry a 7% interest rate, and the company can issue long-term bonds at 12%. The company has set a target debt ratio of 40%. For each of the following debt maturity mixes: (1) construct the company's balance sheet, (2) construct the financial half of its income statement, and (3) evaluate its risk and return using the return on equity and current ratios. 20% of the debt is current,80% long-term 40% of the debts current, 60% long-term 60% of the debt is current, 40% long-term 80% of the debt is current, 20% long-term
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