Suppose That the 2009 Actual and 2010 Projected Financial Statements

question 25

Multiple Choice

Suppose that the 2009 actual and 2010 projected financial statements for Carrier Corp are initially as shown below. In these tables, sales are projected to rise 40 percent in the coming year, and the components of the income statement and balance sheet that are expected to increase at the same 40 percent rate as sales are indicated with an italics font. Assuming that Carrier Corp wants to cover the AFN with 50 percent equity, 25 percent long-term debt, and the remainder from notes payable, what amount of additional funds will they need to raise if debt carries a 10 percent interest rate?

• A) $120,000 equity; $60,000 long-term debt; $60,000 notes payable
• B) $60,000 equity; $120,000 notes payable; $60,000 long-term debt
• C) $60,000 equity; $120,000 long-term debt; $60,000 notes payable
• D) none of these answers are correct

---

Definitions:

Cyber Connection

The linking of computers or devices via the internet, allowing for communication and data exchange.

Informal

Pertaining to interactions or structures not governed by formal rules, procedures, or policies, often based on personal or casual connections.

Unofficial Communication System

A communication network that operates outside formal channels within an organization, often known as the "grapevine."

Eyeglasses

Optical devices consisting of lenses mounted in a frame that aid in correcting or assisting vision.