Collingwood Resorts Ltd (CRL) is planning to raise 10 million through a debt issue with these alternatives; 1.


Collingwood Resorts Ltd (CRL) is planning to train 10 favorite through a score posterity succeeding a while these choices;

1. a 20 year, 8% equivalent debenture posterity succeeding a while a $50 alteration expense and $1,000 par scold.

2. A 20-year,10% right compact posterity. Each $1,000 compact has a detachable empower to forfeiture 20 divides for $50 a divide.

The congregation has a 30% tax scold and its hoard is currently selling at $40 per divide. The firm's rights antecedently divide and taxes are 20% of its highization which is currently is:

Common hoard (par $5)                 $5,000,000

Contributed high                          10,000,000

Retained rights                            15,000,000

Total highization                           $30,000,000

Required: 

Complete the strong register to countersegregate the forthcoming

a)Show the highization resulting from each choice instantly succeeding the posterity.

b) Assume that the alteration or the use of the empowers obtain?} locate instantly succeeding the posterity in segregate (a). Likeness the highization resulting from each choice succeeding the alteration or use of the empowers.

c) Prepare segregateial pro forma use and missing statements to likeness rights per divide under:

1) Succeeding the posterity of the score as in segregate (a) and

 2) Succeeding the alteration or use of empowers as in segregate (b)

What differences do you mark in segregate (c)? Why?

                                                       Collingwood Resorts Ltd.

              -----------------------------Debt Alternatives -----------------------------

                                                                  Present                     Convertible               Debt succeeding a while          Conversion         Exercise of                 

                                                                  Conditions                    debt                        warrants                                               warrants

Capitalization (Financing) 

-8 % Equivalent Score

- Common Hoard ($5 par scold)    $5,000,000

- Contributed High                     10,000,000

- Retained Earnings                          15,000,000

Total        

                                                          30,000,000

# of Common Shares                     1,000,000

 -----------------------------------------------------------------------------------------------------------------------------------------------------------------

Net Operating Profit                   $6,000,000

Interest Expense                                            0

Use Antecedently Tax                        $6,000,000

Income Tax (30%)                          1,800,000

Use Succeeding Tax                           $4,200,000

Earnings per Divide                                   $4.20