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CFO of Graham Del plans to have the company issue $500 million of new common stock...

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Accounting

CFO of Graham Del plans to have the company issue $500 millionof new common stock and use the proceeds to pay off some of itsoutstanding bonds. Assume that the company, which does not pay anydividends, takes this action, and that total assets, operatingincome (EBIT), and its tax rate all remain constant. What affect itcan have on the company’s financial statements. Discuss.

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When a firm raises money by selling new shares of stock is called equity financing Also when proceeds of this is used for paying off companys outstanding bonds it will have following impact on companys financial statement 1 ProfitabilityNet income Companys EBIT will    See Answer
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