It is January 2nd. Senior management of Digby meets to determine their investment plan for the year.
Question:
It is January 2nd. Senior management of Digby 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 2.52. Assume the stock can be issued at yesterday's stock price $18.38.
Which of the following statements are true? (Select 2 answers)
A. Long term debt will increase from $34,179,810 to $35,098,927
B. Total Assets will rise to $144,523,927
C. Digby working capital will be unchanged at $15,429,477
D. Total investment for Digby will be $2,320,302
E. Digby will issue stock totaling $919,117
F. Digby bond issue will be $50,980
Statistics Informed Decisions Using Data
ISBN: 978-0134133539
5th edition
Authors: Michael Sullivan III