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SHERILL CORPORATION SHAREHOLDERS’ EQUITYAS OF DECEMBER 30, 20X3 Common stock ($1 par value; 1,000,000 shares) $1,000,000 Additional paid in capital 300,000 Retained earnings 1,700,000 Total shareholders’ equity $3,000,000 The firm earned $300,000 after taxes in 20X3...

Burger Rex is expanding its chain of fast food outlets. This program will require a capital expenditure of $3 million, which must be financed. The company has settled on a three year revolving credit of $3 million, which may be converted into a three year term loan at...

On January 1, Acme Aglet Corporation is contemplating a four year, $3 million term loan from the Fidelity First National Bank. The loan is payable at the end of the fourth year and would involve a loan agreement that would contain a number of protective covenants....

Valesquez Ranches, Inc., wishes to use a new truck fueled by compressed natural gas that costs $80,000. The ranch intends to operate the truck for five years, at the end of which time it is expected to have a $16,000 residual value. Assume that the asset falls in the...

Red Herring Pizza has outstanding warrants, where each warrant entitles the holder to purchase two shares of stock at $24 per share. The market price per share of stock and market price per warrant were the following over the last year:   OBSERVATION   1 2 3...

The common stock of the Blue Sky Corporation earns $3 per share, has a 60 percent dividend payout, and sells at a P/E ratio of 8.333. Blue Sky wishes to offer $10 million of 9 percent, 20 year convertible debentures with an initial conversion premium of 20 percent and...

Faversham Fish Farm has outstanding a 7.75 percent, 20 year convertible debenture issue. Each $1,000 debenture is convertible into 25 shares of common stock. The company also has a straight debt issue outstanding of the same approximate maturity, so it is an easy...

The Rambutan Fruit Company needs to raise $10 million by means of a debt issue. It has the following two alternatives: a 20 year, 8 percent convertible debenture issue with a $50 conversion price and $1,000 face value; or a 20 year, 12 percent straight debt issue....

Jenni Shover, Inc., has warrants outstanding that allow the holder to purchase three shares of common stock for a total $60 for each warrant that is held. Currently, the market price per share of Jenni Shover common stock is $18. However, investors hold the following...