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 75,000 shares of stock plus a new bond issue. Assume the stock can be issued at yesterday's stock price ($39.06) and leverage changes to 2.7. Which of the following statements are true? Select all that apply. Select: 3 Save Answer Digby will issue stock totaling $2, 929, 500 Working capital will remain the same at $11, 352, 081 Total liabilities will be 143, 970, 454 Total assets will rise to $224, 185, 590 The total investment for Digby will be $20, 436, 100

Explanation / Answer

Asnwer:

1. Value of stock issue= 75,000*39.06 = $2929500

2. The above capital transaction deos not affect the working capital. Sp the working capital will remain the same at $11,352,.081.

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