Compuvac Company Has Just Completed Its First Pass Forecast Using

question 23

Multiple Choice

Compuvac Company has just completed its first pass forecast using the projected balance sheet method.The firm has determined that it needs $4 million in new debt which can be sold at par with a 10% annual coupon.Additionally,the firm will sell 500,000 shares of new common equity at $18.10 per share.Next year's expected dividend is $0.48 per share.The firm expects that taxes will be $160,000 less under the second pass than they were under the first pass based on a 40% tax rate.Given this information,what is the incremental change in AFN for Compuvac going from the first pass to the second pass?

• A) $240,000
• B) $0
• C) $480,000
• D) $160,000
• E) $640,000

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Definitions:

Nerve Bundles

Collections of nerve fibers (axons) wrapped together, transmitting electrical impulses within the nervous system.

Central Nervous System

The complex network of nerves and cells that includes the brain and spinal cord, responsible for coordinating sensory information and response.

Peripheral Nervous System

The component of the nervous system that includes nerves and ganglia situated outside the brain and spinal cord.

Nervous System

A complex network of nerves and cells that transmit signals between different parts of the body to coordinate actions and sensory information.