The Marsh Company, Whose Present Balance Sheet Is Summarized Below

question 61

Multiple Choice

The Marsh Company, whose present balance sheet is summarized below, is considering the issuance of $50 million of 8% subordinated debentures that are convertible into common stock at a price of $20. $\begin{array}{llll}\text { Balance Sheet }\\\text { (millions of dollars) }\\\text { Current Assets } & \$ 150 & \text { Current Liabilities } & \$ 100 \\\text { Fixed Assets, net } & \$ 350 & \text { Long-term Debt } & \$ 150\\\text { Total } & \$ 500&\text { Common Equity } & \$ 250 \\&&\text { Total } & \$ 500\end{array}$ ? Determine the amount of long-term debt (LTD) and common equity (CE) on the pro forma balance sheet, assuming conversion of the entire issue. (Answers are in $ million.)

• A) LTD $150, CE $250
• B) LTD $150, CE $300
• C) LTD $200, CE $300
• D) LTD $200, CE $250

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Definitions:

Persistent

Describes substances that remain in the environment for extended periods without breaking down, often leading to long-term pollution.

Natural Attractants

Substances or stimuli that naturally lure or attract organisms, often used in pest control or animal behavior studies.

Evolved

The process by which organisms undergo gradual changes in their genetic makeup over successive generations, leading to the development of new characteristics or species.

Investing Cash Outflow

Cash used in investing activities, including purchasing assets or making loans.