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Innovative Engineering Company

Capital Requirement 1,200,000.00 Pre-tax 454,545.45 151,515.15 757,575.76


Assumptions: Income 300,000.00 100,000.00 500,000.00
Interest Cost for Debt 8% per annum
Yearly Income 300,000.00
Tax rate is 34%
Common Stock Equity is 900,000.00
Preferred Stock Rate 0.10

Proposal A - Arbor Capital Corporation Cost of Proposal Cost of Proposal Cost of Proposal
Long Term Loan 1,100,000.00 8% 88,000.00 88,000.00 88,000.00
366,545.45 63,515.15 669,575.76 Pre-tax income
241,920.00 41,920.00 441,920.00 Retained earnings after Taxes
Common Stock 100,000.00 1,000,000.00 0.24 0.04 0.44 Dividend/share

Debt to Equity Ratio 1.10 24,192.00 4,192.00 44,192.00 Dividend to Arbor


217,728.00 37,728.00 397,728.00 Dividend to Group
112,192.00 92,192.00 132,192.00 Earning of Arbor

Proposal B
Debt 200,000.00 8% 16,000.00 16,000.00 16,000.00 Interest Expense
438,545.45 135,515.15 741,575.76 Pre-tax income
Preferred Stock 900,000.00 289,440.00 89,440.00 489,440.00 Retained Earnings After Taxes
Common Stock 100,000.00 1,000,000.00 10% 90,000.00 90,000.00 90,000.00 Dividend on Preferred Stock
Debt to Equity Ratio 0.20 199,440.00 -560.00 399,440.00 Dividend to Share after Preferred
0.19944 -0.00056 0.39944 Dividend per share on Common Stock
19,944.00 -56.00 39,944.00 Dividend to Arbor
179,496.00 -504.00 359,496.00 Dividend to Group
125,944.00 105,944.00 145,944.00 Earning of of Arbor

Proposal 3
Debt 600,000.00 8% 48,000.00 48,000.00 48,000.00 Interest Expense
406,545.45 103,515.15 709,575.76 Pre-tax Income
Common Shares 600,000.00 40% Share 268,320.00 68,320.00 468,320.00 Retained Earning
0.178880 0.045547 0.3122133 Dividend per share
Equity Common Shares 1,500,000.00 107,328.00 27,328.00 187,328.00 Dividend to Arbor
Arbor 600,000.00 160,992.00 40,992.00 280,992.00 Dividend to Group
Group 900,000.00 155,328.00 75,328.00 235,328.00 Earning of Arbor

0.40

Proposal 4
Debt 300,000.00 8% 24,000.00 24,000.00 24,000.00 Interest Expense
430,545.45 127,515.15 733,575.76
Common Shares 900,000.00 50% Share 284,160.00 84,160.00 484,160.00 Retained Earnings After Taxes
0.157867 0.046756 0.268978 Dividend Per Share
Equity - common Shares 1,800,000.00 142,080.00 42,080.00 242,080.00 Dividend to Arbor
Arbor 900,000.00 142,080.00 42,080.00 242,080.00 Dividend to Group
Group 900,000.00 166,080.00 66,080.00 266,080.00 Earnings of Arbor
Innovative Engineering Company

Capaital Requirement 1,200,000.00


Assumption
Interest Cost for Debt 8% per annum
Yearly Income 300,000.00
Tax rate is 34%
Common Stock Equity is 900,000.00
Preferred Stock Rate 0.10

Proposal A - Arbor Capital Corporation


Long Term Loan 1,100,000.00

Common Stock 100,000.00 1,000,000.00

Debt to Equity Ratio 1.10

Proposal 2
Debt 200,000.00

Preferred Stock 900,000.00


Common Stock 100,000.00 1,000,000.00
Debt to Equity Ratio 0.20

Proposal 3
Debt 600,000.00

Common Shares 600,000.00 40% Share

Equity Common Shares 1,500,000.00


Arbor 600,000.00
Group 900,000.00

0.40
Proposal 4
Debt 300,000.00

Common Shares 900,000.00 50% Share

Equity - common Shares 1,800,000.00


Arbor 900,000.00
Group 900,000.00

0.17
Pre-tax 454,545.45 ### ###
Income 300,000.00 ### ###

Cost of Proposal Cost of Pr Cost of Proposal


8% 88,000.00 88,000.00 88,000.00
366,545.45 63,515.15 ### Pre-tax income
241,920.00 41,920.00 ### Retained earnings after Taxes
0.24 0.04 0.44 Dividend/share

24,192.00 4,192.00 44,192.00 Dividend to Arbor


217,728.00 37,728.00 ### Dividend to Group
112,192.00 92,192.00 ### Earning of Arbor

8% 16,000.00 16,000.00 16,000.00 Interest Expense


438,545.45 ### ### Pre-tax income
289,440.00 89,440.00 ### Retained Earnings After Taxes
10% 90,000.00 90,000.00 90,000.00 Dividend on Preferred Stock
199,440.00 -560.00 ### Dividend to Share after Preferred
0.19944 -0.00056 0.39944 Dividend per share on Common Stock
19,944.00 -56.00 39,944.00 Dividend to Arbor
179,496.00 -504.00 ### Dividend to Group
125,944.00 ### ### Earning of of Arbor

8% 48,000.00 48,000.00 48,000.00 Interest Expense


406,545.45 ### ### Pre-tax Income
268,320.00 68,320.00 ### Retained Earning
0.178880 0.045547 ### Dividend per share
107,328.00 27,328.00 ### Dividend to Arbor
160,992.00 40,992.00 ### Dividend to Group
155,328.00 75,328.00 ### Earning of Arbor
8% 24,000.00 24,000.00 24,000.00 Interest Expense
430,545.45 ### ###
284,160.00 84,160.00 ### Retained Earnings After Taxes
0.157867 0.046756 0.268978 Dividend Per Share
142,080.00 42,080.00 ### Dividend to Arbor
142,080.00 42,080.00 ### Dividend to Group
166,080.00 66,080.00 ### Earnings of Arbor
earnings after Taxes

Earnings After Taxes


on Preferred Stock
o Share after Preferred
per share on Common Stock
Earnings After Taxes
Innovative Engineering Company

Capital Requirement 1,200,000.00


Assumptions:
Interest Cost for Debt 8% per annum
Yearly Income 300,000.00
Tax Rate 0.34
Common Stock Equity is 900,000.00
Preferred Stock Rate 0.10

Proposal A Proposal B Proposal C Proposal D


Pre-tax Income 454545.455 151515.15152 757575.758 454545.455 151515.2 757575.8 454545.5 151515.2 757575.8 454545.5 151515.2 757575.8
After tax Income 300000 100000 500000 300000 100000 500000 300000 100000 500000 300000 100000 500000
Debt 1100000 200000 600000 300000
Common Stock 100000
1000000

Preferred Stock (Arbor) 0


Preferred Stock (Innovative) 0
Debt to Equity Ratio 1.1
Interest Expense (Debt) 88000
Retained Earnings (less Int. Exp.) 366545.455
Tax 124625.455
Retained Earnings After Taxes 241920
Div. Per Share 0.24192
Div. to Arbor 24192
Div. to Innovative
Earnings of Arbor