Please SELECT 3 options: It is January 2nd and senior management of Digby meets
ID: 2740278 • Letter: P
Question
Please SELECT 3 options:
It is January 2nd and 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 75,000 shares of stock plus a new bond issue. Assume the stock can be issued at yesterday's stock price ($39.06) and leverage changes to 2.7. Which of the following statements are true? Select all that apply. Select: 3 Save Answer Digby will issue stock totaling $2,929,500 Working capital will remain the same at $11,352,081 Total liabilities will be 143,970,454 Total assets will rise to $224,185,590 The total investment for Digby will be $20,436,100Explanation / Answer
Answer 1 Answer 1 is correct No. of share issued 75000 Price per share 39.06 Total value of shares 2929500 Answer 2 Answer 2 is correct Because of the above transaction current assets and current liabilities remain unaffected. Answer 3 Answer 3 is uncorrect. Total Equity before issue 81759 equity issued 2929500 Total Equity after issue 3011259 leverage ratio 2.7 Total liabilities will be 8130399 Answer 4 Answer 4 is uncorrect. Total assets = equity + total liabilities Total Equity 3011259 Total Liabilities 8130399 Total Assets 11141658 Answer 5 Answer 5 is uncorrect. Total investment will be $ 11141658