Reference no: EM131187991
As the chief finacial officer of Cascade Designs, you have the following information:
Next year's expected net income after tax but before new financing................................................$70 million
Sinking-fund payments due next year on the existing debt.............................................................$20 million
Interest due next year on the existing debt...................................................................................$15 million
Common stock price per share....................................................................................................$40.00
Common shares outstanding.......................................................................................................25 million
Company tax rate........................................................................................................................30%
A) Calculate Cascade's times-interest-earned ratio for next year assuming the firm raises $70 million of new debt at an interest rate of 6%
B) Calculate Cascade's time-burden-covered ratio for next year assuming annual sinking-fund payments on the new debt will equal $7 million
C) Calculate next year's earnings per share assuming Cascade raises $70 million in new debt
D) Calculate next year's time-interest-earned ration, times-burden-covered ratio, and earnings per share if Cascade sells 2 million new shares at $35 a share instead of raising new debt.
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: As the chief finacial officer of Cascade Designs, Calculate Cascade's times-interest-earned ratio for next year assuming the firm raises $70 million of new debt at an interest rate of 6%. Calculate Cascade's time-burden-covered ratio for next year as..
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