Question
It is January 2nd. Senior management of Digby meets to determine their investment plan for the year. They decide to fully fund a plant and
It is January 2nd. Senior management of Digby meets to determine their investment plan for the year. They decide to fully fund a plant and equipment purchase by issuing 50,000 shares of stock plus a new bond issue. The CFO happily notes this will raise their Leverage (Assets/Equity) to a new target of 2.49. Assume the stock can be issued at yesterday's stock price $22.77. Which of the following statements are true? (Select 2 answers)
Long term debt will increase from $34,056,721 to $35,195,335
Total investment for Digby will be $2,837,062
Digby will issue stock totaling $1,138,614
Digby bond issue will be $49,667
Digby working capital will be unchanged at $17,115,394
Total Assets will rise to $147,700,086
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