the following information: ?? – Issue $200,000 of 5% bonds at 100 ?? – Issue 20,000 additional Common Shares ($10 each) ?? – Issue 20,000 $2 Cumulative Preferred Shares ($10 each) (number of shares is...

the following information:

?? – Issue $200,000 of 5% bonds at 100

?? – Issue 20,000 additional Common Shares ($10 each)

?? – Issue 20,000 $2 Cumulative Preferred Shares ($10 each) (number of shares is 20,000; the price per share is $10; the dividend rate is $2) (cumulative means… if we don’t pay dividends thsi year, we pay 2x the dividends next year)

Other Stuff on notepad

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  Business is high-end cricket equipment manufacturing – Ravindra’s family has been producing this equipment for the last 75 years. They have real expertise and have managed to keep their processes fairly secret over time. Their value is based on being the best at making this equipment.
  

  
  

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  Ravindra doesn’t know much about bonds and shares etc. - give him some basics that are important in this situation.
  

  
  

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  The corporate tax rate in Ontario is ~ 20%
  

  
  

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  Prepare an analysis over a 3-year time period – with forecasted pre-tax net income of $100K; $150K; $200K.
  

  
  

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  Ravindra currently owns 10,000 common shares of the company