The Marsh Company, whose present balance sheet is summarized below, is considering the issuance of $50 million of 8% subordinated debentures that are convertible into common stock at a price of $20.

Determine the amount of long-term debt (LTD) and common equity (CE) on the pro forma balance sheet, assuming conversion of the entire issue (Answers are in $ million).
A)LTD $150, CE $250
B)LTD $150, CE $300
C)LTD $200, CE $300
D)LTD $200, CE $250

Question

The Marsh Company, whose present balance sheet is summarized below, is considering the issuance of $50 million of 8% subordinated debentures that are convertible into common stock at a price of $20.

Determine the amount of long-term debt (LTD) and common equity (CE) on the pro forma balance sheet, assuming conversion of the entire issue (Answers are in $ million).
A)LTD $150, CE $250 
B)LTD $150, CE $300 
C)LTD $200, CE $300 
D)LTD $200, CE $250

Quizplus · Accepted Answer

No calculations needed

The Marsh Company, Whose Present Balance Sheet Is Summarized Below