Home » The Radford Company currently has 100,000 shares of common stock outstanding with a market price of \$23 per share. It also has 5 million outstanding…

# The Radford Company currently has 100,000 shares of common stock outstanding with a market price of \$23 per share. It also has 5 million outstanding…

The Radford Company currently has 100,000 shares of common stock outstanding with a market price of \$23 per share. It also has 5 million outstanding in 6% 15 year bonds. The company is considering a \$2 million expansion program that it can finance with: A) All common stock at \$22 a share, B) \$2 million in bonds at 8% interest, or C) Half common stock at \$21 a share, and half bonds at 6%.
The best estimate available for the company’s EBIT after the expansion is .5 probability of \$800,000 and .3 probability of \$1,000,000, and .2 probability of \$1,250,000. The corporation’s tax rate is 40%.
1. What is the expected EBIT after the expansion? (Show your calculations.)
.5 X \$800,000 =
.3 X \$1,000,000 =
.2 X \$1,200,000 =
\$400,000+\$300,000+\$240,000=
2. What are the expected earnings after taxes for each expansion financing plan option?
Plan A. __________ Plan B. ___________ Plan C. __________
3. What is the expected EPS for each option? (
Plan A. EPS ________ Plan B. EPS __________ Plan C. EPS ____________
4. What is the expected return on equity investment for investors for each plan option?
Plan A_______ Plan B________ Plan C__________
5. Which financing plan do you recommend?

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.