The Capital Structure of Springmaid Company Is as Follows

question 3

Multiple Choice

The capital structure of Springmaid Company is as follows:
Long-term debt $ 400 million
Common stock, $1 par 50 million
Contributed capital in excess of par 250 million
Retained earnings 600 million
Total $ 1,300 million
The company has decided to raise additional capital by selling $100 million of 8% debentures with warrants attached.Each $1,000 debenture will have 40 warrants attached, and each warrant will entitle the holder to purchase one share of common stock at $20.Assume that no other changes in the capital structure occur between now and the time the warrants are exercised.Determine how much total capital the company will raise as a result of the issuance of debentures with warrants attached (after exercise of the warrants) .

• A)$100 million
• B)$80 million
• C)$180 million
• D)$20 million

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Definitions:

ExampleRecursion

ExampleRecursion typically refers to a demonstration or example that illustrates how recursion works, which is a method where the solution to a problem depends on solutions to smaller instances of the same problem.

Base Case

A condition within a recursive function that does not recurse, stopping the recursive calls and allowing the function to begin returning.

Recursive Method

A method in programming that calls itself in order to solve a problem by breaking it down into simpler subproblems.

Precondition

A condition that must be true before a function or operation is executed, ensuring that the function's or operation's assumptions hold.