Suppose That the 2013 Actual and 2014 Projected Financial Statements

question 38

Multiple Choice

Suppose that the 2013 actual and 2014 projected financial statements for Carrier Corp.are initially as shown in the following tables.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 is correct

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