Explain fully what the standard mix of debt and equity is.
Explain fully what the standard mix of debt and equity is.
Homework Answers
The mix of debt and equity indicates the way a company has been financed.
Debt consists of short term and long term liabilities while equity consists of preferred stock, common stock and retained earnings.
A 30-70 debt to equity mix would imply that 30% of company's assets are financed by debt while 70% of the assets are financed by equity.
What is true about the mix of the debt versus equity that a company uses to...
What is true about the mix of the debt versus equity that a company uses to finance its assets and strategic activities? a. debt equity mix is not important b. equity should exceed debt c. debt equity mix influences cost of capital d. None
The firm's target capital structure is the mix of debt, preferred stock, and common equity the...
The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm plans to raise funds for its future projects. The target proportions of debt, preferred stock, and common equity, along with the cost of these components, are used to calculate the firm's weighted average cost of capital (WACC). If the firm will not have to issue new common stock, then the cost of retained earnings is used in the firm's WACC calculation. However, if...
The firm's target capital structure is the mix of debt, preferred stock, and common equity the...
The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm plans to raise funds for its future projects. The target proportions of debt, preferred stock, and common equity, along with the cost of these components, are used to calculate the firm's weighted average cost of capital (WACC). If the firm will not have to issue new common stock, then the cost of retained earnings is used in the firm's WACC calculation. However, if...
Debt has expected return of 8% and standard deviation of 12%. Equity has expected return of...
Debt has expected return of 8% and standard deviation of 12%. Equity has expected return of 13% and standard deviation of 20%. The covariance between debt and equity is 0.0072. You have a portfolio that invests equally in debt and equity. What is the standard deviation of your portfolios?
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.
Question 49 of 75 est on home equity debt is fully deductible as long as the debt is used to_ O P...
question 49 of 75 est on home equity debt is fully deductible as long as the debt is used to_ O Pay for personal living expenses O To pay off credit card debts To buy, build or substantially improve a main home or second home. O To purchase a new vehicle. â–¡Mark for follow up Question 50 of 75. Written substantiation is required for all contributions to qualified charitable organizations when the am O $50 or more. O $100 or...
Seven different financing plans with their D-E mixes and costs of debt and equity capital for...
Seven different financing plans with their D-E mixes and costs of debt and equity capital for a new innovations project are summarized below. Use the data to determine what mix of debt and equity capital will result in the lowest WACC. Equity Capital Percentage Debt Capital Percentage Rate,% Plan Rate, % 100 17.9 13 30 35 50 70 7.8 65 50 35 10.8 7.8 10.8 9.1 4 7.9 65 80 9.8 6. 20 12.5 100 12.5 D-E mix of %...
Seven different financing plans with their D-E mixes and costs of debt and equity capital for...
Seven different financing plans with their D-E mixes and costs of debt and equity capital for a new innovations project are summarized below. Use the data to determine what mix of debt and equity capital will result in the lowest WACC. Debt Capital Percentage 100 70 65 50 35 20 Equity Capital Plan Rate, % 15.5 13.5 Percentage Rate% 2 3 4 5 6 30 35 50 65 80 100 7.8 7.8 7.9 9.8 12.5 12.5 10.5 8.5 DE mix...
Seven different financing plans with their D-E mixes and costs of debt and equity capital for...
Seven different financing plans with their D-E mixes and costs of debt and equity capital for a new innovations project are summarized below. Use the data to determine what mix of debt and equity capital will result in the lowest WACC. Equity Capital Percentage Rate,% Plan 1 2 3 4 5 6 7 Debt Capital Percentage 100 70 65 50 35 20 Rate, % 17.3 13.4 11.2. 112 9.5 7.4 30 35 50 65 80 100 7.8 7.8 7.9 9.8...
The WACC computation requires you to use the weighted average of the after tax cost of debt and the cost of equity, using appropriate proportions for debt and equity. your frims balance sheet shows $30M of debt and $70 of equity. the market value of your
The WACC computation requires you to use the weighted average of the after tax cost of debt and the cost of equity, using appropriate proportions for debt and equity. your frims balance sheet shows $30M of debt and $70 of equity. the market value of your firms equity is $120M. the new project is different from the existing projects that the firm has invested in, other firms that have investments similar to the new project tend to use a mix...
The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm plans to raise funds for its future projects. The target proportions of debt, preferred stock, and common equity, along with the cost of these components, are used to calculate the firm's weighted average cost of capital (WACC). If the firm will not have to issue new common stock, then the cost of retained earnings is used in the firm's WACC calculation. However, if...
question 49 of 75 est on home equity debt is fully deductible as long as the debt is used to_ O Pay for personal living expenses O To pay off credit card debts To buy, build or substantially improve a main home or second home. O To purchase a new vehicle. â–¡Mark for follow up Question 50 of 75. Written substantiation is required for all contributions to qualified charitable organizations when the am O $50 or more. O $100 or...
Seven different financing plans with their D-E mixes and costs of debt and equity capital for a new innovations project are summarized below. Use the data to determine what mix of debt and equity capital will result in the lowest WACC. Equity Capital Percentage Debt Capital Percentage Rate,% Plan Rate, % 100 17.9 13 30 35 50 70 7.8 65 50 35 10.8 7.8 10.8 9.1 4 7.9 65 80 9.8 6. 20 12.5 100 12.5 D-E mix of %...
Seven different financing plans with their D-E mixes and costs of debt and equity capital for a new innovations project are summarized below. Use the data to determine what mix of debt and equity capital will result in the lowest WACC. Debt Capital Percentage 100 70 65 50 35 20 Equity Capital Plan Rate, % 15.5 13.5 Percentage Rate% 2 3 4 5 6 30 35 50 65 80 100 7.8 7.8 7.9 9.8 12.5 12.5 10.5 8.5 DE mix...
Seven different financing plans with their D-E mixes and costs of debt and equity capital for a new innovations project are summarized below. Use the data to determine what mix of debt and equity capital will result in the lowest WACC. Equity Capital Percentage Rate,% Plan 1 2 3 4 5 6 7 Debt Capital Percentage 100 70 65 50 35 20 Rate, % 17.3 13.4 11.2. 112 9.5 7.4 30 35 50 65 80 100 7.8 7.8 7.9 9.8...
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