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Author Question: Amalgamated Enterprises is planning to purchase some new equipment. With this new equipment, the ... (Read 120 times)

roselinechinyere27m

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Amalgamated Enterprises is planning to purchase some new equipment. With this new equipment, the
  company expects sales to increase from 8,000,000 to 10,000,000.
 
  A portion of the financing for the purchase of
  the equipment will come from a 1,000,000 new common stock issue. The company knows that its current
  assets, fixed assets, accounts payable, and accrued expenses increase directly with sales. The company's net
  profit margin on sales is 8 percent, and the company plans to pay 40 percent of its after-tax earnings in
  dividends. A copy of the company's current balance sheet is given below.
  Amalgamated Enterprises Balance Sheet
  Current assets 3,000,000
  Fixed assets 12,000,000
  Total assets 15,000,000
  Accounts payable 4,000,000
  Accrued expenses 1,000,000
  Long-term debt 3,000,000
  Common stock 2,000,000
  Retained earnings 5,000,000
  Total liabilities and net
  worth
  15,000,000
  Prepare a pro forma balance sheet for Amalgamated for next year.

Question 2

Other things the same, the use of debt financing reduces the firm's total tax bill resulting in a higher
  total market value.
 
  Indicate whether the statement is true or false


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dantucker

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roselinechinyere27m

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Reply 2 on: Jul 10, 2018
Great answer, keep it coming :)


xiazhe

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Reply 3 on: Yesterday
Gracias!

 

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