Tom Scott is the owner, president, and primary salesperson for Scott Manufacturing. Because of this, the...

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Finance

Tom Scott is the owner, president, and primary salesperson forScott Manufacturing. Because of this, the company's profits aredriven by the amount of work Tom does. If he works 40 hours eachweek, the company's EBIT will be $550,000 per year; if he works a50-hour week, the company's EBIT will be $625,000 per year. Thecompany is currently worth $3.2 million. The company needs a cashinfusion of $1.3 million, and it can issue equity or issue debtwith an interest rate of 7 percent. Assume there are no corporatetaxes.
a. What are the cash flows to Tom under each scenario?(Enter your answers in whole dollars, not millions ofdollars e.g. 1,234,567. Do not round intermediatecalculations.
I think I have the answers but I am having problemsentering whole dollars and my answers keep coming upwrong.
Scenario-1 Debt issue:
Cash flows
40-hour week $ _____
50-hour week $ _
Scenario-2 Equity issue:
Cash flows
40-hour week $
50-hour week $ ____

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Tom Scott is the owner, president, and primary salesperson forScott Manufacturing. Because of this, the company's profits aredriven by the amount of work Tom does. If he works 40 hours eachweek, the company's EBIT will be $550,000 per year; if he works a50-hour week, the company's EBIT will be $625,000 per year. Thecompany is currently worth $3.2 million. The company needs a cashinfusion of $1.3 million, and it can issue equity or issue debtwith an interest rate of 7 percent. Assume there are no corporatetaxes.a. What are the cash flows to Tom under each scenario?(Enter your answers in whole dollars, not millions ofdollars e.g. 1,234,567. Do not round intermediatecalculations.I think I have the answers but I am having problemsentering whole dollars and my answers keep coming upwrong.Scenario-1 Debt issue:Cash flows40-hour week $ _________50-hour week $ _________Scenario-2 Equity issue:Cash flows40-hour week $ __________50-hour week $ __________