Long-Term Financing NeededAt year-end 2021, Wallace Landscaping's total assets, all of which are used in operations, were $1.97 million, and its accounts payable were $435,000. Sales,which in 2021 were $3.4 million, are expected to increase by 30% in 2022. Total assets and accounts payable are proportional to sales, and that relationship willbe maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $465,000 in 2021, and retained earningswere $270,000. Wallace has arranged to sell $190,000 of new common stock in 2022 to meet some of its financing needs. The remainder of its financing needswill be met by issuing new long-term debt at the end of 2022. (Because the debt is added at the end of the year, there will be no additional interest expensedue to the new debt.) Its net profit margin on sales is 3%, and 45% of earnings will be paid out as dividends.a. What was Wallace's total long-term debt in 2021? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 millionshould be entered as 2,000,000. Round your answer to the nearest dollar.$What were Wallace's total liabilities in 2021? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 millionshould be entered as 2,000,000. Round your answer to the nearest dollar.$b. How much new long-term debt financing will be needed in 2022? (Hint: AFN - New stock = New long-term debt.) Do not round intermediate calculations..Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round your answer to the nearest dollar.$

Long-term debt financing refers to the debt which is financed for more than one year which should be…

At year-end 2021, Wallace Landscaping's total assets, all of which are used in operations, were $1.97 million, and its accounts payable were $435,000. Sall which in 2021 were $3.4 million, are expected to increase by 30% in 2022. Total assets and accounts payable are proportional to sales, and that relationsh be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $465,000 in 2021, and retained earnin were $270,000. Wallace has arranged to sell $190,000 of new common stock in 2022 to meet some of its financing needs. The remainder of its financing n will be met by issuing new long-term debt at the end of 2022. (Because the debt is added at the end of the year, there will be no additional interest expens due to the new debt.) Its net profit margin on sales is 3%, and 45% of earnings will be paid out as dividends. a. What was Wallace's total long-term debt in 2021? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 m should be entered as 2,000,000. Round your answer to the nearest dollar. $ What were Wallace's total liabilities in 2021? Do not round intermediate calculations. Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round your answer to the nearest dollar. $ b. How much new long-term debt financing will be needed in 2022? (Hint: AFN- New stock = New long-term debt.) Do not round intermediate calculations Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000. Round your answer to the nearest dollar.

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter9: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 5P: Long-Term Financing Needed At year-end 2018, Wallace Landscapings total assets were 2.17 million,...