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IULI Questions 1 to 6 refer to the following scenario: When it started a few years...
When it started a few years ago, a firm issued shares at R2 a share, and raised R600,000 in equity. These shares now trade at R6 a share on the open market. The debt-equity mix is currently 10% (10% debt, 90% equity). The firm has generated a net profit o
When it started a few years ago, a firm issued shares at R2 a share, and raised R600,000 in equity. These shares now trade at R6 a share on the open market. The debt-equity mix is currently 10% (10% debt, 90% equity). The firm has generated a net profit of R150,000 this year and, as a rule, pays out 50% of its profit as dividends to shareholders.
A consultant has collected the following information regarding Middle Road Publishing: Total assets $3,000 million ...
A consultant has collected the following information regarding Middle Road Publishing: Total assets $3,000 million Tax rate 40% Operating income (EBIT) $850 million Debt ratio 0% Interest expense $0 million WACC 10% Net income $510 million M/B ratio 1.00´ Share price $32.00 EPS = DPS $3.20 The company has no growth opportunities (g = 0), so the company pays out all of its earnings as dividends (EPS = DPS). The consultant believes that if the...
Reliable Gearing currently is all-equity-financed. It has 12,000 shares of equity outstanding, selling at $80 a...
Reliable Gearing currently is all-equity-financed. It has 12,000 shares of equity outstanding, selling at $80 a share. The firm is considering a capital restructuring. The low-debt plan calls for a debt issue of $200,000 with the proceeds used to buy back stock. The high-debt plan would exchange $400,000 of debt for equity. The debt will pay an interest rate of 8%. The firm pays no taxes. a. What will be the debt-to-equity ratio after each possible restructuring? (Round your answers...
Which of the following choices is CORRECT? Select one: a. An optimal capital structure simultaneously maximizes...
Which of the following choices is CORRECT? Select one: a. An optimal capital structure simultaneously maximizes EPS and minimizes the WACC b. An optimal capital structure simultaneously maximizes stock price and minimizes the WACC c. An optimal capital structure minimizes the cost of equity, which leads to maximizing the stock price d. An optimal capital structure simultaneously minimizes the cost of debt, the cost of equity, and the WACC e. An optimal capital structure is found by determining the debt-equity mix...
stion Questions 15 and 16 refer to the following scenario. Great Grains Ltd sells grain feed...
stion Questions 15 and 16 refer to the following scenario. Great Grains Ltd sells grain feed to farmers. Their total sales figure for the past year was R1.8 million. They sell 65% of their produce on credit. Their total bad debts figure for the year was R128,700. 15 What is Great Grain 's bad debt ratio? Select one: a. 7.15% b. 11% c. 35% d. 4.65% e. 20,43% 16 If the average bad debt ratio for the grain feed sales!...
FVQ is currently an all equity firm that has 3,000 shares of stock outstanding with a...
FVQ is currently an all equity firm that has 3,000 shares of stock outstanding with a market price of $18 a share. The tax rate is 40 percent. The firm is considering adding $35,000 of debt to its capital structure. The debt will be sold at par value. What is the levered value of the equity? Select one: O a $41,000 b. $68,000 C. $14,000 d. $33,000 e. $54,000
Can I please have answers to the following questions: sted cash Hlows and net present values....
Can I please have answers to the following questions:
sted cash Hlows and net present values. d. the ranking of capital in terms of riskiness and the choice based on this ranking. Oe. the organizational structure that will llow a firm to obtain the best cost of capital A firm has the following information for the last two years. Calculate its degree of financial leverage Sales Operating costs Net income Number of shares outstanding This year $1,500,000 $900,000 $150,000 50,000...
ply Cuco VCCN CIOT Which of the following assets should be considered the most liquid. Select...
ply Cuco VCCN CIOT Which of the following assets should be considered the most liquid. Select one: Select one: O a. A vehicle owned by the firm o b. A patent owned by the firm c. Accounts Receivables O d. Inventory JOZ/OL-Spring 2020/8-Week Session 2/20673 - Bug A firm is financed with 35% debt and 65% equity. This mixture of debt and equity is referred to as the firm's Select one: Select one: O a. capital structure O b. asset...
Multiple Choice- Select the best answer Question #2: Chapter 14 The true value of a security is: A. the value of that security at some future date. B. the sum of all future dividends. C. the amount...
Multiple Choice- Select the best answer Question #2: Chapter 14 The true value of a security is: A. the value of that security at some future date. B. the sum of all future dividends. C. the amount that a fundamental analyst will pay. D. the price that incorporates all currently available information. Question #3: Chapter 14 What is the book value per share of equity for a firm with $1 million in net common equity, $50,000 in authorized share capital,...
1. DEF Company is comparing three different capital structures. Plan I would result in 800 shares...
1. DEF Company is comparing three different capital structures. Plan I would result in 800 shares of stock and $9,000 in debt. Plan II would result in 700 shares of stock and $13,500 in debt. Plan III is an all-equity plan and would result in 1,000 shares of stock. The firm’s EBIT will be $8,000 per year until infinity. The interest rate on the debt is 10%. (12 marks total) a. Ignoring taxes, compute the EPS for each...
stion Questions 15 and 16 refer to the following scenario. Great Grains Ltd sells grain feed to farmers. Their total sales figure for the past year was R1.8 million. They sell 65% of their produce on credit. Their total bad debts figure for the year was R128,700. 15 What is Great Grain 's bad debt ratio? Select one: a. 7.15% b. 11% c. 35% d. 4.65% e. 20,43% 16 If the average bad debt ratio for the grain feed sales!...
FVQ is currently an all equity firm that has 3,000 shares of stock outstanding with a market price of $18 a share. The tax rate is 40 percent. The firm is considering adding $35,000 of debt to its capital structure. The debt will be sold at par value. What is the levered value of the equity? Select one: O a $41,000 b. $68,000 C. $14,000 d. $33,000 e. $54,000
Can I please have answers to the following questions:
sted cash Hlows and net present values. d. the ranking of capital in terms of riskiness and the choice based on this ranking. Oe. the organizational structure that will llow a firm to obtain the best cost of capital A firm has the following information for the last two years. Calculate its degree of financial leverage Sales Operating costs Net income Number of shares outstanding This year $1,500,000 $900,000 $150,000 50,000...
ply Cuco VCCN CIOT Which of the following assets should be considered the most liquid. Select one: Select one: O a. A vehicle owned by the firm o b. A patent owned by the firm c. Accounts Receivables O d. Inventory JOZ/OL-Spring 2020/8-Week Session 2/20673 - Bug A firm is financed with 35% debt and 65% equity. This mixture of debt and equity is referred to as the firm's Select one: Select one: O a. capital structure O b. asset...
Multiple Choice- Select the best answer Question #2: Chapter 14 The true value of a security is: A. the value of that security at some future date. B. the sum of all future dividends. C. the amount that a fundamental analyst will pay. D. the price that incorporates all currently available information. Question #3: Chapter 14 What is the book value per share of equity for a firm with $1 million in net common equity, $50,000 in authorized share capital,...
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