1) You are on management team for Big Sky Enterprises. It is a commencement of December 2013 and you have been called in to meeting which is discussing the financial projection for the ending of this year (December 31, 2013). You have been given the information which is listed below:
Debt The firm has= $20,000,000 of bonds issues and outstanding.
i) If firm utilizes a retention ratio of= 75%, compute dividends per share the firm will pay based on the present earnings.
ii) The firm will incorporate dividends payable in final balance sheet for the year ending December 31, 2013. Make the proforma balance sheet which incorporates dividend payable account.
iii) If bond issue that matures in five years has protective covenant that mentions that management will maintain a sustain current ratio of 2, determine the maximum dividend per share?
iv) Make the proforma balance sheet which incorporates dividend payable account. $10,000,000 of the bonds mature in two year and carry the 8% coupon which is paid semi-annually $10,000,000 of the bonds were issued last year and mature in five years. The bonds have a 6% coupon which is paid semi-annually. Equity Firm is authorized to have 50,000 shares outstanding. Presently, firm has 25,000 shares issued and outstanding. Projected net income for year ending December 31, 2013 is $17,500.