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kramer
3 years ago
5

Dirty Don's Bicycle Shop is current financed with 100% equity. The firm currently has 100,000 shares of common stock outstanding

, selling for $50 per share. Don is considering a capital restructuring project, where the firm would be financed with 45% debt and 55% equity. How many bonds would Don have to sell at par value? (Remember that par value of a bond is $1,000).
Business
1 answer:
Stella [2.4K]3 years ago
6 0

Answer:

Number of bonds to raise = 2250

Explanation:

given data

current financed = 100% equity

common stock outstanding = 100,000 shares

selling = $50 per share

debt = 45%

equity =55%

par value of a bond = $1,000

to find out

How many bonds would Don have to sell at par value

solution

we get here first the value of equity that is express as

value of equity = Number of shares × Price per share .................1

put here value

value of equity = 100,000 × $50

value of equity = $5,000,000

and

financed with bonds = 45 % of value of equity

financed with bonds = 45 % × $5,000,000

financed with bonds = $2,250,000

so

Number of bonds to raise is express as

Number of bonds to raise = \frac{2,250,000}{1000}

Number of bonds to raise = 2250

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During the last year, Len Corp. generated $1,170.00 million in cash flow from operating activities and had negative cash flow ge
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Answer:

The firm’s cash flow (CF) due to financing activities in the second year is    - $450 million

Explanation:

As we know that,

Net increase in cash = Operating activity - investing activity - financing activity

where,

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Now put these values to the above formula  

So, the value would equal to

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So, financing activity = $80 million - $530 million

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Answer:The answer is A

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2 years ago
Suppose that the pound is pegged to gold at 6 pounds per ounce, whereas the franc is pegged to gold at 12 francs per ounce. This
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Answer:

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if you have pounds and want to make a gain: you take 6 pounds and purchase 13.2 francs and you then buy 1.1 ounces of gold. Then you sell the 1.1 ounces of gold in exchange for 6.6 pounds.

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on august 1, paid $72,000 cash to purchase houtte's 9%, six-month debt securities ($72,000 principal), dated august 1.
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  • After only three to twelve months, many short-term investments are sold or turned into cash. CDs, money market accounts, high-yield savings accounts, government bonds, and Treasury bills are a few typical examples of short-term investments.
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