Question: It is January 2nd Senior management of Chester meets to

It is January 2nd. Senior management of Chester 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’s stock price ($41.51). Which of the following statements are true? Check all that apply.
Select: 3
Chester will issue stock totaling $2,075,500
The Chester bond issue will be $3,528,350
The Chester Working Capital will be unchanged at $16,919
Long term debt will increase from $84,013,408 to $86,088,908
Total Assets will rise to $232,052,000
Total investment for Chester will be $5,603,850

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  • CreatedJuly 29, 2013
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