From the given table calculate:
Firm A |
Firm B |
|
Next year’s price |
$140.50 |
$140.50 |
Dividend |
$ 12 |
$ 13.00 |
Total pretax payoff |
$140.50 |
$140.50 |
Today’s stock price |
$300 |
$ 95.78 |
Capital gain |
$ 13.50 |
$ 7.78 |
Firm A:
Capital Gain given is = $13.5
Tax @ 20% = 13.5 * 20 / 100 = $2.7
Firm B:
Capital Gain given is = $7.78
Tax @ 20% = 7.78 * 20 / 100 = $1.556
From the given table calculate: Tax on capital gain at 20% Firm A Firm B Next...
From the given table calculate: Tax on dividend at 40% Firm A Firm B Next year’s price $140.50 $140.50 Dividend $ 12 $ 13.00 Total pretax payoff $140.50 $140.50 Today’s stock price $300 $ 95.78 Capital gain $ 13.50 $ 7.78
WorI 2. Consider Table 1 Table l Corporate tax Personal tax ratePersonal tax rate Cost of Firm AssetsDebt Equity unlevered equity | on equity (%) rate (%) on debt (%) 15% 100 0 100 0% 0% 0% 15% 100 50 50 20% 0% 0% 100 100 50 50 15% 20% 20% 10% 50 15% 20% 10% 50 4 20% Earnings Before Interest and Taxation (EBIT) is 50 for all firms Cost of debt capital is 10% for all firms (a)...
Using the data in the table to the right, calculate the dividend yield and your capital gain from investing in the stock from January 1 to December 31. Date Price Dividend 1/2/03 $33.88 - 2/5/03 $30.67 $0.17 5/14/03 $29.49 $0.17 8/13/03 $32.38 $0.17 11/12/03 $39.07 $0.17 1/2/04 $41.99 -
HighGrowth Company has a stock price of $ 20$20. The firm will pay a dividend next year of $1.00, and its dividend is expected to grow at a rate of 4.0% per year thereafter. What is your estimate of HighGrowth's cost of equity capital? The required return (cost of capital) of levered equity is _______%. (Round to one decimal place.)
2. Consider Table 1 Table 1 Levered Firm L Liabilities and Shareholders' Equit Assets 100 200 Equi Assets 100 Debt Total 200 200 Total Additional Financial Information for Levered Firm L 80 Earnings Before Interest and Tax Cost of debt capital 8% 12% 255% Cost of unlevered equi Corporate tax rate 15% 30% Personal tax rate on debt income Personal tax rate on equity income Consider Table 1. Calculate the interest expense, earnings before taxes, the tax liability, and the...
Imagine a given capital market where a risk-free asset with a return, rf, of 6% per period is traded. On the given capital market, the only assets traded, besides the risk-free, are stocks in firm A, firm B and firm C. Thus, no other risky assets are traded on the capital market. The price today (t = 0) of a stock in A is DKK 50. On the capital market, all participants agree that in one period (to time t...
a. Calculate the after-tax cost of debt.
b. Calculate the cost of preferred stock.
c. Calculate the cost of common stock (both retained earnings
and new common stock).
d. Calculate the WACC for Dillon Labs.
Calculation of individual costs and WACC Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following weights:...
Problem 2. The firm expects that its production function in the next period will be given by Fe (KL) 10VKL. The firm employs 25 workers. The real interest rate equals 5% and the depreciation rate equals 20%. The price for the firm's products is 1 EUR while the price of capital goods is 1O EUR Find the user cost of capital. Find net investments, assuming that initially the firm has a capital stock of 88. Modify your answer to part...
Problem 2. The firm expects that its production function in the next period will be given by Fe(K, L)-10 v KL. The firm employs 25 workers. The real interest rate equals 5% and the depreciation rate equals 20%. The price for the firm's products is 1 EUR while the price of capital goods is 10 EUR a) Find the user cost of capital. Find net investments, assuming that initially the firm has a capital stock of 88. Modify your answer...
During 2019, Dana had the following gains and losses. Calculate her 2019 total income tax liability for these items if her tax bracket is 37% LT gain from sale on personal use boat: $5,000 LT gain from sale of old jewlery: 300 LT loss from sale of MCM Corp stock: 1,000 LT loss from sale of personal use auto:: 400 ST loss from sale of Swan Co. Stock: 500 ST gain from sale of green co stock: 3,000