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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 2.7. Assume the stock can be issued at yesterday%u2019s stock price ($41.55). Which of the following statements are true? Check all that apply.
Total investment for Digby will be $5,609,250 | Long term debt will increase from $85,118,430 to $87,195,930 |
Total Assets will rise to $230,641,000 | The Digby Working Capital will be unchanged at $15,388 |
The Digby bond issue will be $3,531,750 Digby will issue stock totaling 2,077,500. |
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