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 2.8. Assume the stock can be issued at yesterday’s stock price ($27.43). Which of the following statements are true? Check all that apply.
Select : 3
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- Digby will issue stock totaling $1,371,500
- Total investment for Digby will be $3,840,200
- The Digby bond issue will be $2,468,700
- The Digby Working Capital will be unchanged at $12,763
- Total Assets will rise to $216,183,000
- Long term debt will increase from $82,486,798 to $83,858,298
Jos Simulation Answered question April 9, 2025
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