Assignment 4-2 - PROBLEM 13-2 FLOTATION COSTS AND ISSUE...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
PROBLEM 13-2 FLOTATION COSTS AND ISSUE SIZE DATA Needs to raise $10,000,000.00 Mrkt price $120.00 Flotation Costs $15.00 Net Price= $95,238 This would not be a net p Dollar size = $11,428,560.00 How many shares= 95,238
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
price, but instead the number of shares.
Background image of page 2
Return on Operating Assets. M x 12 = 48% M = 4% Operating Assets x Operating Asset Turnover = Sales $6,000,000 x 12 = Sales Sales = $72,000,000 Sales [STEP 2] x Operating Profit Margin [STEP 1] = EBIT $72,000,000 x 4% = EBIT EBIT = $2,880,000 EBIT [STEP 3] x Degree of Operating Leverage = Revenue before Fixed Costs $2,880,000 x 10 = Revenue before Fixed Costs Revenue before Fixed Costs = $28,800,000 Sales [STEP 2] - Revenue before Fixed Costs [STEP 4] = Total Variable Costs $72,000,000 - $28,800,000 = Total Variable Costs Total Variable Costs = $43,200,000 Revenue before Fixed Costs [STEP 4] - EBIT [STEP 3] = Fixed Costs $28,800,000 - $2,880,000 = Fixed Costs Fixed Costs = $25,920,00 I have now graded all assignments for week 4. Many of you did a great job finding all t case # 2 from chapter 12. This was a major step in the process before you could answer
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/15/2011 for the course BUSINESS BUS 401 taught by Professor Dawnmckinley during the Fall '10 term at Ashford University.

Page1 / 8

Assignment 4-2 - PROBLEM 13-2 FLOTATION COSTS AND ISSUE...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online