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 (=assests/equity) to a new target of 2.7. Assume the stock can be issued at yesterdays stick price $44.86. Which of the following statements are true? Check all that apply. Select 3:
a. Digby will issue stock totaling $2,243,000
b. Total investment for Digby will be $6,056,100
c. The Digby bond issue will be $3,813,100
d. The Digby Working Capital will be unchanged at $18,289
e. Total Assets will rise to $239,430,000
f. Long term debt will increase from $85,161,693 to $87,404,693
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