Do this problem independently of Problem 13. Suppose our firm wants a debt-to-equity ratio of 50 percent
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Do this problem independently of Problem 13. Suppose our firm wants a debt-to-equity ratio of 50 percent during each year. How would you modify the pro forma statement?
Data from in Problem 13
Let’s reconsider our pro forma example. Suppose the interest rate on our debt depends on our financial well-being. More specifically, suppose that if our earnings before interest and taxes (EBIT) are negative, our interest rate on debt is 16 percent. If our interest expense is more than 10 percent of EBIT and EBIT is positive, our interest rate on debt is 13 percent. Otherwise, our interest rate is 10 percent. Modify the pro forma statement to account for this variable interest rate.
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Related Book For
Microsoft Excel Data Analysis And Business Modeling
ISBN: 9780137613663
7th Edition
Authors: Wayne Winston
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