A limited company plans to make an investment of SEK 100 million and consider two...
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Finance
A limited company plans to make an investment of SEK 100 million and consider two alternative ways to finance the investment.
Option 1: issue bonds with a maturity of 5 years Option 2: issue shares
The companies' balance sheets in summary before investments and their financing are summarized below:
Balance sheet (unit SEK m)
Assets 400 Equity 120 Long-term liabilities 250 Current liabilities 30
Indicate how the equity / assets ratio and the debt / equity ratio are affected by the two financing alternatives.
The answers must include a calculation of the key figures both before and after the investment has been made for both alternatives. All calculations must be reported.
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