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1. Stockholders:
Elect the board of directors
Are active in day to day management of the firm
All of the above
Each have one vote at the annual meeting
2. Select one:
3. A stakeholder is:
a person who initially founded a firm and currently has management control over that firm.
a creditor to whom a firm currently owes money.
any person or entity other than a stockholder or creditor who potentially has a claim on the cash flows of a firm.
a person who owns shares of stock.
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- Seattle Adventures, Incorporated, is trying to decide between the following two alternatives to finance its new $17 million gaming center: a. Issue $17 million, 6% note. b. Issue 1 million shares of common stock for $17 per share with expected annual dividends of $1.02 per share. Required: 1. Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. 2. Answer the following questions for the current year: (a) By how much are interest payments higher if issuing the note? (b) By how much are dividend payments higher by issuing stock? (c) Which alternative results in higher earnings per share?Rustic Campsites, Incorporated, is trying to decide between the following two alternatives to finance its new $34 million gaming center. a. Issue $34 million, 6% note. b. Issue 1 million shares of common stock for $34 per share with expected annual dividends of $2.04 per share. Required: 1. Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. 2. Answer the following questions for the current year: (a) By how much are interest payments higher if issuing the note? (b) By how much are dividend payments higher by issuing stock? (c) Which alternative results in higher earnings per share? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. (Enter your answers in dollars, not millions (ie, $5.5 million should be entered as 5,500,000). Round your…As the CFO of your company, you want to determine the rate your company must require for capital investment projects. You have gathered the following information about the various funding sources and market conditions. Debt: 23,000 bonds. 7.2 annual% coupon, with semiannual payments. $1,000 face value. 19 years to maturity. Priced at $1,060 per bond. Preferred stock: 25,000 shares preferred stock. Priced at $95 per share. $5.00 dividend per share. Common Stock: 560,000 shares. Priced at $74 per share. Beta is 1.17. Market: 7% market risk premium. 5.1% risk-free rate. Company’s tax rate is 23%. What is the company's Weighted Average Cost of Capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 12.34.
- Penny Arcades, Incorporated, is trying to decide between the following two alternatives to finance its new $35 million gaming center. a. Issue $35 million, 7% note b. Issue 1 million shares of common stock for $35 per share with expected annual dividends of $2.45 per share. Required: 1. Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. 2. Answer the following questions for the current year (a) By how much are interest payments higher if issuing the note? (b) By how much are dividend payments higher by issuing stock? (c) Which alternative results in higher earnings per share? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Answer the following questions for the current year: (a) By how much are interest payments higher if issuing the note? (b) By how much are dividend payments higher by issuing stock? (c) Which alternative results in higher earnings per share? (Enter…PQR Corporation is considering the following alternative plans of financing for raising$4,000,000: The following additional information is available for PQR Corporation: Earnings before bond interest and income taxes (EBIT) are $9,000,000. The tax rate is 35%. All bonds or stocks are issued at their par values. Interest is payable at the end of each year. Required: Which plan should company choose & why (i.e. Explain the rationale behind selecting the plan)? Provide all the detailed calculations.Penny Arcades, Inc., is trying to decide between the following two alternatives to finance its new $34 million gaming center: a. Issue $34 million of 6% bonds at face amount.b. Issue 1 million shares of common stock for $34 per share. 1. Assuming bonds or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. (Enter your answer in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000). Round your "Earnings per Share" to 2 decimal places. Round your "Earnings per Share" to 2 decimal places.) Issue Bonds Issue stock Operating income 10,900,000 10,900,000 Interest expense (bonds only) Income before tax Income tax expense (40%) Net Income Number of shares 3,900,000 4,900,000 Earnings per share
- DIRECTIONS: Read and analyze the following problems and supply what is required and support it with necessary computations. 1. A company plans to issue a 25-year bond with a 12.5% interest rate, issued at a face value of P1, 000. The company is subject a 30% tax rate and expects a return on investment at 8%. Compute for the cost of debt issuance.A business wants to borrow $300,000 from a bank for a future investment. The bank offers a 5 year loan, compounded quarterly, at 5% interest on the debt. During the period of the bank loan, the company establishes a sinking fund to help discharge the bank loan, at 4%, compounded quarterly, using the future lump sum debt as the lump sum payment in the sinking fund. FIND: the quarterly deposits that the company must deposit into the sinking fund to pay off its bank debt in one lump sum.The founder of Frenza asks us to assist her in accounting and analysis of the corporation's bonds, which have an annual contract rate of 8%. She wants to know the business and accounting implications of further debt issuances as she looks for ways to finance the growth of Frenza. The following Tableau Dashboard is provided to help us address her questions and provide recommendations for her business decisions. $100,000 $80,000 $60,000 $40,000 $20,000 $0 Frenza Bond Amortization Carrying Value Unamortized Discount January 1, Year June 30, Year 1 December 31, June 30, Year 2 December 31, June 30, Year 3 December 31, 1 Year 1 Year 2 Year 3 Cash & Inventory for Competing Companies Market Rate for Company Bonds
- The following information applies to this question: Johnson Corporation plans to obtain financing with a $1,000,000 bond issue that has a term of 10 years. Payments wilI be made semi-annually. if the bond (payment) rate is stated at 7%, and the bonds call for semi-annual payments, what is the amount of those payments? O a. $350,000 O b. $70,000 OC. $35,000 d. $700,000What is the equity position of the lender, RBC, at the end of 13 years if a corporate loan of $A is financed and amortized over 20 years with payments of $3,200 for the first 12 years and $4,000 for the next 8 years, and with a 5% annual interest rate, provided all payments are made as scheduled? (Answer to the nearest dollar) A. $25,853 B. $16,905 C. $23,145 D. $19,613A group of investors is planning to set up a new company. To help determine the new company’s financial requirements, the president has asked you to construct a pro forma balance sheet for 31 December 2019, the end of the first year of operations, and to estimate the company’s external financing requirements for 2019. Sales for 2019 are projected at $25 million, and the following are industry average ratios for similar companies: Sales to common equity (S/E) 5 times Current debt to equity (CL/E) 50% Total debt to equity (D/E) 80% Current ratio (CA/CL) 2.2 times Sales to inventory (S/Inv) 9 times Accounts receivable to sales ((A/R)/S) 10% Fixed assets to equity (FA/E) 70% Profit margin (NIAT/S) 5% Dividend payout ratio (DIV/NIAT) 30% a. Complete the pro forma balance sheet below, assuming that 2019 sales are $25 million and that the firm maintains industry average ratios b. What would be the amount of equity financing that must be supplied by the investors?