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How to avoid an emergency loan? Basic Financing 11 In this scenario, Finance is facing a negative cash position. Currently the department is both issuing
How to avoid an emergency loan?
Basic Financing 11 In this scenario, Finance is facing a negative cash position. Currently the department is both issuing and retiring $6,000 of long-term debt. Use the sliders below to reassess the company's financing decisions and protect against an Emergency Loan. Marketing GASTORE Production Alerts Report Toamname ASDEPES Round 2009 Task Question You have invested $6,000 in plant improvements and financed $6,000 Long-Term debt to pay for it. You have also elected to retire $6,000 of Long-Term Debt. Now, your closing cash position reads -$3,000. Finance Cash from Financing (in 000's) Policy lag Raise Capital Spend Capital Current Debt $6,000 Retire Long Term Debt Borrow SP Due They Cash Flow Starting Cash Position January 1, 2019 $0 $10,000 $3,431 Interest Rate: 3 2018 Emergency Loans $6,000 Issue Long Term Debt $0 Other $10,000 Long-Term Debt (Bonds) Closing Cash Position ($3,000) Issue (Borrow) Retire: Cash from Operating Cash from Investing Cash from Financing Dividends Paid Issue Stock Retire Stock Net Change in Current Debt Issue Long-Term Debt Retire Long-Term Debt ($6,431) $0 $0 $0 $0 $0 $0 $6,000 ($6,000) Interest Rate Hint Submit Common Stock Issue Stock Buy Back Projected Stock Price Incorrect! The $6,000 Long-Term Debt you initially issued was a solid financial decision to pay for operations (plant improvements). Borrowing any more, or less is avoiding the real issue - it is generally bad practice to borrow and pay-back at the same time. Try something else. SE2 Projected Earning Share Closing Cash Position December 31, 2019 ($3,000) Shares outstanding Total Raised Capital: $6,000 Total Spent Capital: $6,000 her's EquityStep by Step Solution
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