Question: Berea Resources is planning a $80 million capital expenditure program for the coming year. Next year, Berea expects to report to the IRS earnings of
Berea Resources is planning a $80 million capital expenditure program for the coming year. Next year, Berea expects to report to the IRS earnings of $42 million after interest and taxes. The company presently has 24 million shares of common stock issued and outstanding. Dividend payments are expected to increase from the present level of $12 million to $14 million. The company expects its current asset needs to increase from a current level of $22 million to $26 million. Current liabilities, excluding short-term bank borrowings, are expected to increase from $13 million to $15 million. Interest payments are $5 million next year, and long-term debt retirement obligations are $9 million next year. Depreciation next year is expected to be $14 million on the companys financial statements, but the company will report depreciation of $17 million for tax purposes.
How much external financing is required by Berea for the coming year? Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to the nearest whole number.
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