For the next fiscal year, you forecast net income of or the next fiscal year, you forecast net income of $ 49400 and ending assets of $ 505600 Your firm's payout ratio is 9.6 %.Your beginning...
For the next fiscal year, you forecast net income of or the next fiscal year, you forecast net income of $ 49400 and ending assets of $ 505600 Your firm's payout ratio is 9.6 %.Your beginning stockholders' equity is $ 299 comma 900and your beginning total liabilities are $119900Your non-debt liabilities such as accounts payable are forecasted to increase by $10300 Assume your beginning debt is $ 101900 What amount of equity and what amount of debt would you need to issue to cover the net new financing in order to keep your debt-equity ratio constant?
Homework Answers
Answer:-
Step-1
Formula:
Beginning debt equity ratio constant = beginning stock holder equity/ beginning debt
Beginning debt equity ratio constant= 299900/(101900+119900)
= 299,900/221800=1.35
Step-2
formula:
Final debt equity ratio constant = Fina stock holder equity/final debt
Final debt equity ratio constant = Fina stock holder equity/final debt=1.35
Retained earnings = 49400-(49400*0.096)=44657.6
Final stock holder equity = 271267.8+44657.6=315925.4
Final debt equity ratio constant= 315925.4/(505600-271267.8)=1.35
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