Compuvac Company Has Just Completed Its First Pass Forecast Using

question 23

Multiple Choice

Compuvac Company has just completed its first pass forecast using the projected balance sheet method.The firm has determined that it needs $4 million in new debt which can be sold at par with a 10% annual coupon.Additionally,the firm will sell 500,000 shares of new common equity at $18.10 per share.Next year's expected dividend is $0.48 per share.The firm expects that taxes will be $160,000 less under the second pass than they were under the first pass based on a 40% tax rate.Given this information,what is the incremental change in AFN for Compuvac going from the first pass to the second pass?

• A) $240,000
• B) $0
• C) $480,000
• D) $160,000
• E) $640,000

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Definitions:

Oral Temperature

A measurement of the body's internal temperature taken from inside the mouth.

Vital Signs

The measurable indicators of physiological function, including temperature, pulse, respiration, and blood pressure.

Vital Signs

The basic physiological measurements that indicate the state of a patient's essential bodily functions, typically including temperature, pulse, respiration, and blood pressure.

Adolescent

A young person in the process of developing from a child into an adult, typically considered to be between the ages of 13 and 19.