Compuvac Company Just Completed Its Initial Forecasts of Next Year's

question 67

Multiple Choice

Compuvac Company just completed its initial forecasts of next year's financial statements using the projected balance sheet method. The firm determined that it needs $4 million in new debt, which can be issued at par with a 10 percent annual coupon. Additionally, the firm can sell 500,000 shares of new common equity, which will net $18.10 per share. Next year's expected dividend is $0.48 per share. After accounting for the financing feedbacks associated with raising the required funds, Compuvac expects its taxes to be $160,000 lower than were reported in the initial forecasts. Given this information, what should Compuvac find the change to be in the addition to retained earnings that is reported in the income statement that was initially forecasted after the financing feedbacks are included?

• A)$0
• B)$160,000
• C)- $800,000
• D)-$320,000
• E)-$480,000

---

Definitions:

New Patient

An individual who is receiving medical care or examination from a healthcare provider for the first time.

Laboratory Results

The outcomes or findings from tests conducted in a controlled environment to analyze samples.

Medical Facility

An establishment that provides healthcare services, such as a hospital, clinic, or medical office.

Notice of Privacy

A statement given to individuals to inform them of how their personal information will be used and protected by an organization.