Prepare the necessary journal entry(ies) to record the issue of HYBRID units on January 1, 2017.
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- ABC Co. is authorized to issue 1,000,000 ordinary shares with a $5 par value and 100,000,6% preference shares with a $20 par value. The company is considering financing a largeexpansion project that is expected to bring sustainable growth to the company. Thecompany’s investment banker has suggested that the company takes advantage of bothequity and debt financing. He proposed that the company sells securities to investorscalled HYBRID. Each unit of HYBRID consists of: (1) a $1,000 face value, 10% stated rate,5-years bond, which pays interest annually, and (2) 20 ordinary shares. On January 1,2017, the company issued 500 units of HYBRID for a price of $1,200 per unit. Thecompany paid 50 units of HYBRID to the Investment banker as underwriting fees. Assumethat the effective market rate was 12% and that ordinary shares have an appraisal valueof $15 per share Prepare the necessary journal entry(ies) to record the issue of HYBRID units on January1, 2017.You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $32.50 million in assets with $30.25 million in debt and $2.25 million in equity. LotsofEquity, Inc. finances its $32.50 million in assets with $2.25 million in debt and $30.25 million in equity. Calculate the debt ratio. (Round your answers to 2 decimal places.) Calculate the equity multiplier. (Round your answers to 2 decimal places.) Calculate the debt-to-equity. (Round your answers to 2 decimal places.)You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $38.00 million in assets with $33.75 million in debt and $4.25 million in equity. LotsofEquity, Inc. finances its $38.00 million in assets with $4.25 million in debt and $33.75 million in equity. Calculate the debt ratio. (Round your answers to 2 decimal places.) debt ratio Lotsofdebt Inc: % Lotsofequity Inc: % Calculate the equity multiplier. (Round your answers to 2 decimal places.) Equity Multiplier Lotsofdebt Inc: Timess Lotsodequity Inc: Times Calculate the debt-to-equity. (Round your answers…
- You are considering a stock investment in one of two firms (NoEquity, Inc., and NoDebt, Inc.), both of which operate in the same industry and have identical EBITDA of $39.4 million and operating income of $15.5 million. NoEquity, Inc., finances its $70 million in assets with $69 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc., finances its $70 million in assets with no debt and $70 million in equity. Both firms pay a tax rate of 21 percent on their taxable income. Calculate the net income and return on assets-funders' investments-for the two firms. (Enter your dollar answers in millions of dollars. Round "Net income" answers to 3 decimal places and "Return on assets" answers to 2 decimal places.) Answer is not complete. NoEquity Net income $ 0.000 million Return on assets % NoDebt million %You are considering a stock investment in one of two firms (NoEquity, Inc., and NoDebt, Inc.), both of which operate in the same industry and have identical EBITDA of $39.3 million and operating income of $16.5 million. NoEquity, Inc., finances its $75 million in assets with $74 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc., finances its $75 million in assets with no debt and $75 million in equity. Both firms pay a tax rate of 21 percent on their taxable income. Calculate the net income and return on assets-funders' investments-for the two firms. (Enter your dollar answers in millions of dollars. Round "Net income" answers to 3 decimal places and "Return on assets" answers to 2 decimal places.) Net income Return on assets NoEquity million % NoDebt million %You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $36.00 million in assets with $33.00 million in debt and $3.00 million in equity. LotsofEquity, Inc. finances its $36.00 million in assets with $3.00 million in debt and $33.00 million in equity. Calculate the debt ratio. (Round your answers to 2 decimal places.) LotsofDebt, Inc. = ___.__% LotsofEquity, Inc. = ___.__% Calculate the equity multiplier. (Round your answers to 2 decimal places.) LotsofDebt, Inc. =______ times LotsofEquity, Inc. = ______ times Calculate the debt-to-equity. (Round your answers to 2 decimal places.) LotsofDebt, Inc. =______ times LotsofEquity, Inc. = ______ times
- You are considering a stock investment in one of two firms (NoEquity, Inc., and NoDebt, Inc.), both of which operate in the same industry and have identical EBITDA of $39.5 million and operating income of $14.5 million. NoEquity, Inc., finances its $50 million in assets with $49 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc., finances its $50 million in assets with no debt and $50 million in equity. Both firms pay a tax rate of 21 percent on their taxable income. Calculate the net income and return on assets—funders’ investments—for the two firms. (Enter your dollar answers in millions of dollars. Round "Net income" answers to 3 decimal places and "Return on assets" answers to 2 decimal places.) NoEquity. NoDebt Net income million million Return on assets % %Epiphany is an all-equity firm with an estimated market value of $400,000. The firm sells $225,000 of debt and uses the proceeds to purchase outstanding equity. Compute the weight in equity and the weight in debt after the proposed financing and repurchase of equity.You are considering a stock investment in one of two firms (LotsofDebt, Incorporated and LotsofEquity, Incorporated), both of which operate in the same industry. Lots of Debt, Incorporated finances its $31.00 million in assets with $29.50 million in debt and $1.50 million in equity. LotsofEquity, Incorporated finances its $31.00 million in assets with $1.50 million in debt and $29.50 million in equity. Calculate the debt ratio. Calculate the equity multiplier. Calculate the debt-to-equity. Complete this question by entering your answers in the tabs below. Debt ratio Equity multiplier Debt to equity Calculate the debt-to-equity. Note: Round your answers to 2 decimal places. LotsofDebt, Incorporated LotsofEquity, Incorporated. Debt-to-equity times times
- You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $3200 million in assets with $30.00 million in debt and $200 million in equity. LotsofEquity, Inc. finances its $32.00 million in assets with $2.00 million in debt and $30.00 million in equity. Calculate the debt ratio. (Round your answers to 2 decimal places.) Debt ratio LotsofDebt, Inc. LotsofEquity, Inc. Calculate the equity multiplier. (Round your answers to 2 declmal places.) Equity multiplier LotsofDebt, Inc. times LotsofEquity. Inc, times Calculate the debt-to-equity. (Round your answers to 2 decimal places.) Debt-to-equity LotsofDebt, Inc. times LotsofEquity. Inc. times pe here to search W 59°F Mostly cloudy DELLYou are investigating the expansion of your business and have sought out two avenues for the sourcing of funds for the expansion. The first (Plan A) is an all-ordinary-share capital structure. $1 million would be raised by selling 200,000 shares at $5 each. Plan B would involve the use of financial leverage. $800,000 would be raised issuing bonds with an effective interest rate of 15% (per annum). Under this second plan, the remaining $200,000 would be raised by selling 40,000 shares at $5 price per share. The use of financial leverage is considered to be a permanent part of the firm's capitalisation, so no fixed maturity date is needed for the analysis. A 30% tax rate is appropriate for the analysis. REQUIRED: a) Find the EBIT indifference level associated with the two financing plans using an EBIT-EPS graph. Check your results algebraically. b) A detailed financial analysis of the firm's prospects suggests that the long-term earnings before interest and taxes (EBIT) will be $100,000…ABC is an all-equity firm with an estimated market value of $900,000. The firm sells $325,000 of debt and uses the proceeds to purchase outstanding equity. Compute the weight in equity and the weight in debt after the proposed financing and repurchase of equity.