It is January 2nd and senior management of Digby meets to determine their invest

Question

It is January 2nd and 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 $10,000,000 in bonds. Assume the bonds are issued at face value and leverage changes to 2.8. Which of the following statements are true?

Select all that apply. Select:

3 Total Assets will rise to $212,736,871

Working capital will remain the same at $12,632,445

Total liabilities will be $133,452,026

The total investment for Digby will be $19,261,129

Digby’s long-term debt will rise by $10,000,000

Explanation / Answer

Answer will be long term debt will be raise by $10,000,000

bonds issued means incease in the debt value of company

therefore option E- longterm debt raise by $10,000,000 is correct

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