question archive It is January 2nd

It is January 2nd

Subject:Operations ManagementPrice: Bought3

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 2.7. Assume the stock can be issued at yesterday's stock price ($34.21). Which of the following statements are true? Check all that apply.

Select : 3

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  •  Digby will issue stock totaling $1,710,500
  •  Total investment for Digby will be $4,618,350
  •  The Digby bond issue will be $2,907,850
  •  The Digby Working Capital will be unchanged at $16,676
  •  Total Assets will rise to $222,833,000
  •  Long term debt will increase from $81,415,899 to $83,126,399

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