I A B M 1 2 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 WELL and the firm realizes a 20% return on assets (ROA=0.2) 3 4 cou wn 5 6 ROA= 0,2 FNANCING PACKAGE FNANCING PACKAGE interest rate on debt 1 2 3 2 3 0,1 10% $6,00 $6,00 $30,00 $30,00 7 8 Operating Earnings in millions 9 interest expense in millions 10 Earnings for owners in millions 11 Number of shares in millions 12 Earnings per share EPS 13 $6,00 $0,00 $6,00 1 $30,00 $0,00 $30,00 Assets in millions Debt Equity # of shares in millions Debt/Equity Ratio Debt/Assets Ratio 14 15 16 17 18 Windows'u Etkinletir A B C D 1 2 E F G H K L M N 0 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) 3 4 5 6 ROA= 0,04 FNANCING PACKAGE interest rate on debt 0,1 10% 2 $1,20 3 $1,20 1 $1,20 $0,00 $6,00 FNANCING PACKAGE 1 2 $30,00 $30,00 $0,00 $30,00 3 $30,00 7 8 Operating Earnings in millions 9 interest expense in millions 10 Earnings for owners in millions 11 Number of shares in millions 12 Earnings per share EPS 13 14 Assets in millions Debt Equity # of shares in millions Debt/Equity Ratio Debt/Assets Ratio 15 16 17 18 19 20 Windows'u Etkinletir