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Problem:

During 2010, Raines Umbrella Corp. had sales of $740,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $540,000, $85,000, and $100,000, respectively. In addition, the company had an interest expense of $54,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)

Suppose Raines Umbrella Corp. paid out $66,000 in cash dividends. Is this possible? If spending on net fixed assets and net working capital was zero, and if no new stock was issued during the year,

Required:

Question: What is the net new long-term debt?

Note: Please provide reasons to support your answer.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91149360

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