Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

h 09: Selected End-of-Chapter Problems-Corporate Valuation and Financial Planning Back to Assignment Attempts: 0 Keep the Highest: 0/3 2. Problem 9-05 (L ong-Term Financing Needed)

image text in transcribed
h 09: Selected End-of-Chapter Problems-Corporate Valuation and Financial Planning Back to Assignment Attempts: 0 Keep the Highest: 0/3 2. Problem 9-05 (L ong-Term Financing Needed) Problem Walk-Through Long-Term Financing Needed At year-end 2018 Wallace landscaping's total assets were $2.19 million, and its accounts payable were $575,000 Sales, which in 2018 ere S2.1 are expected to increase by 25% in 2019. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts paryable. Common stock amounted to $540,000 in 2018, and retained earnings were $355,000. Wallace has arranged to sell $170,000 of new common stock in 2019 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2019. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 3%, and 45% of earnings will be paid out as dividends. a. What was Wallace's total long-term debt in 2018? Do not round intermediate calculations. Round your answer to the nearest dollar What were Wallace's total liabilities in 2018? Do not round intermediate calculations. Round your answer to the nearest dollar b. How much new long-term debt financing will be needed in 20197 (Hint: AFN- New stock - New long-term debt.) Do not round intermediate calculations. Round your answer to the nearest dollar

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Health Care Finance Basic Tools For Nonfinancial Managers

Authors: Judith Baker

2nd Edition

0763726605, 9780763726607

More Books

Students also viewed these Finance questions

Question

=+a) What time series components do you observe in this series?

Answered: 1 week ago

Question

Able to describe variations in rewards practices.

Answered: 1 week ago