For the next fiscal year, you forecast net income of $51,300 and ending assets of $505,400. Your firm's payout ratio is 9.9%. Your beginning stockholders' equity is $299,200 and your beginning total liabilities are $120,500. Your non-debt liabilities such as accounts payable are forecasted to increase by $10,000. Assume your beginning debt is $104,400. What amount of equity and what amount of debt would you need to issue to cover the net new financing in order to keep your debt-equity ratio constant? The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career. The amount of equity to issue will be $9,898. (Round to the nearest dollar.) The amount of debt to issue will be $ (Round to the nearest dollar.)

For the next fiscal year, you forecast net income of $51,300 and ending assets of $505,400. Your firm's payout ratio is 9.9%. Your beginning stockholders' equity is $299,200 and your beginning total liabilities are $120,500. Your non-debt liabilities such as accounts payable are forecasted to increase by $10,000. Assume your beginning debt is $104,400. What amount of equity and what amount of debt would you need to issue to cover the net new financing in order to keep your debt-equity ratio constant? The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career. The amount of equity to issue will be $9,898. (Round to the nearest dollar.) The amount of debt to issue will be $ (Round to the nearest dollar.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 4P

See similar textbooks

Similar questions

The Kretovich Company had a quick ratio of 1.4, a current ratio of 3.0, a days’ sales outstanding of 36.5 days (based on a 365-day year), total current assets of $810,000, and cash and marketable securities of $120,000. What were Kretovich’s annual sales?
For the next fiscal year, you forecast net income of $52,000 and ending assets of $503,400. Your firm's payout ratio is 9.5%. Your beginning stockholders' equity is $295,400, and your beginning total liabilities are $119,200. Your non-debt liabilities, such as accounts payable, are forecasted to increase by $10,300. What will be your net new financing needed for next year?
Aneles Inc.’s Balance Sheet as of December 31, 2020 is as follows: In 2020, the company reported sales of 3,000,000, Net Income of 60,000, and dividends of 10,000. Sales are projected to increase by 10% next year. Both Profit Margin and the Dividend Pay-Out Ratio will remain the same. Operations are at full capacity. Assume external fund will be raised through issuances of Long-Term Obligations or Bonds. A. How much Long-term Debt will the company have to issue next year? B. If the operations are not in full capacity, what will be AFN?
ranger Inc. has done the following projections for its balance sheet: total assets of $85 million, current liabilities of $29 million, long-term liabilities of $43 million. If the firm will require net new financing of $1 million, what is the projected amount of stockholders' equity?
As the chief financial officer of Adirondack Designs, you have the following information: Next year’s expected net income after tax but before new financing $ 51 million Sinking-fund payments due next year on the existing debt $ 26 million Interest due next year on the existing debt $ 21 million Common stock price, per share $ 33.5 Common shares outstanding 31 million Company tax rate 35% Calculate Adirondack’s times-interest-earned ratio for next year assuming the firm raises $61 million of new debt at an interest rate of 2 percent. Calculate Adirondack’s times-burden-covered ratio for next year assuming annual sinking-fund payments on the new debt will equal $3.0 million. Calculate next year’s earnings per share assuming Adirondack raises the $61 million of new debt. Calculate next year’s times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells 2.6 million new shares at $22 a share instead of raising new debt.
Blue Co. is funded by both debt and equity with a total debt to total asset ratio of 40%. If the firm has a retained earnings breakpoint of P2,450,000, how much is the additions to the retained earnings during the year?
Please find attached an Excel spreadsheet with forecasts for Kandy Kanes, Co. Five years of earnings, depreciation, and capital expenditures have been estimated by your equity analyst, and you believe that after the fifth year, free cash flow will grow by 4.5% per year. The market value of debt is $2,500,000 and the firm has $150,000 in marketable securities. There are 750,000 shares outstanding, the tax rate is 25%, and the discount rate (WACC) is 9%. Please do the following: Calculate free cash flow for the next five years Calculate free cash flow for the sixth year assuming a 4.5% growth rate Estimate the value of a share of Kandy Kanes' stock.
An analyst has collected the following information regarding Christopher Co.: · The company's capital structure is 70 percent equity, 30 percent debt. · The yield to maturity on the company's bonds is 7 percent. · The company's year-end dividend (D1) is forecasted to be $0.9 a share. · The company expects that its dividend will grow at a constant rate of 7 percent a year. · The company's stock price is $25. · The company's tax rate is 40 percent. · The company anticipates that it will need to raise new common stock this year. Its investment bankers anticipate that the total flotation cost will equal 10 percent of the amount issued. Assume the company accounts for flotation costs by adjusting the cost of capital. Given this information, calculate the company's cost of new equity. Round it to two decimal places
Tomey Supply Company’s financial statements for the most recent fiscal year are shown below. The company projects that sales will increase by 27 percent next year. Assume that all costs and assets increase directly with sales. The company has a constant 39 percent dividend payout ratio and has no plans to issue new equity. Any financing needed will be raised through the sale of long-term debt. Prepare pro forma financial statements for the coming year based on this information, and calculate the EFN for Tomey. Tomey Supply Company Income Statement and Balance Sheet. Income Statement Balance Sheet Revenues $1,768,121 Assets Costs 1,116,487 Current Assets $280,754 EBT 651,634 Net Fixed Assets 713,655 Taxes (35%) 228,072 Total assets $994,409 Net Income $423,562 Liabilities and Equity: Current Liabilities $167,326 Long-term…
Altamonte Telecommunications has a target capital structure that consist of 70% debt and 30% equity. The company anticipates that its capital budget for the upcoming year will be $2,000,000. If Altamonte reports net income of $1,100,000 end it follows a residual, dividend, payout policy, what will be its dividend payout ratio? Round your answer to two decimal places.
Your firm has an ROE of 12.1%, a payout ratio of 27%, $594,200 of stockholders' equity, and $386,100 of debt. If you grow at your sustainable growth rate this year, how much additional debt will you need to issue?