Determine their investment plan for the year

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Reference no: EM131371248

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 ($37.80). Which of the following statements are true? Check all that apply.

Total Assets will rise to $233,984,000

The Digby Working Capital will be unchanged at $13,184

The Digby bond issue will be $3,402,000

Long term debt will increase from $84,814,944 to $86,704,944

Total investment for Digby will be $5,292,000

Digby will issue stock totaling $1,890,000

Reference no: EM131371248

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