Question
Your company's summarized financial information for the beginning and projected end of the current year is as follows: Beginning of the Year End of the
Your company's summarized financial information for the beginning and projected end of the current year is as follows:
| Beginning of the Year | End of the Year (projected) | |
| Assets | $90,000 | $100,000 |
| Liabilities | 30,000 | 30,000 |
| Equity | 60,000 | 70,000 |
| Net Income | 15,000 |
Your company is considering issuing 35 bonds at the end of the year (December 31st). The bonds will pay 5% interest semi-annually for 10 years and the market rate for similar bonds is 7%. Calculate the following ratios with and without the bond issue.
Review question: how much did the company pay in dividends this year (if any)? The company did not issue or repurchase any stock during the year.
WITHOUT BOND ISSUE IF BONDS ARE ISSUED
ROA=
ROE=
DEBT RATIO=
DEBT TO EQUITY=
DIVIDENDS =
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Fundamental Accounting Principles
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
20th Edition
1259157148, 78110874, 9780077616212, 978-1259157141, 77616219, 978-0078110870
