Blue Wave Inc. is a satellite imaging company and had 8 6 0 2 0 shares of
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Question:
Blue Wave Inc. is a satellite imaging company and had shares of common stock outstanding. At the end of X its simplified balance sheet is as follows:
Current assets
$
Accounts payable
$
Plant, property and equipment
Common Stock shares issued and outstanding
Other noncurrent assets
Retained Earnings
Total assets
$
Total liab. and shareholders\' equity
$
Blue Wave needs $ to purchase a software service at the beginning of X to enhance its imaging ability. This expense is a onetime expense. The new software is expected to increase its annual operating income before interest expense and income tax from $ to $ Blue Waves income tax rate is
Blue Wave has two options to get funding: one is to borrow the $ from Gringotts Bank at an annual interest rate of interests payable monthly and principal repayable in years. The other is to issue more common stock at $ per share. Blue Wave currently pays dividends at of common stock value.
If Blue Wave decides to issue shares of common stock at $ per share to pay for the software service, what is its return on common equity at the end of X Return on equity is the net income divided by total shareholders equity. Assume the Retained Earnings at the end of X is $
Please round your answer to decimal places.
Related Book For
College Mathematics For Business Economics Life Sciences And Social Sciences
ISBN: 9780321945518
13th Edition
Authors: Raymond Barnett, Michael Ziegler, Karl Byleen
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