Suppose That the 2009 Actual and 2010 Projected Financial Statements

question 40

Multiple Choice

Suppose that the 2009 actual and 2010 projected financial statements for Cramner Corp are initially as shown below. In these tables, sales are projected to rise 35 percent in the coming year, and the components of the income statement and balance sheet that are expected to increase at the same 35 percent rate as sales are indicated with an italics font. Assuming that Cramner Corp wants to cover the AFN with 45 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 an 8 percent interest rate?

• A) $660,600 equity; $367,000 long-term debt; $440,400 notes payable
• B) $660,600 equity; $440,400 notes payable; $367,000 long-term debt
• C) $1,468,000 equity; $0 long-term debt; $0 notes payable
• D) none of the answers are correct

---

Definitions:

General Partnership

A business structure where two or more partners share unlimited liability for the company's debts and obligations.

Capital Account

An account on a nation's balance of payments that records investments and loans between the country and the rest of the world.

Revaluation

The process of adjusting the book value of a currency, asset, or liability to reflect its current market value.

Income Sharing

An agreement or policy where generated income is distributed among participants or stakeholders based on pre-defined criteria or ratios.