Using the five-way DuPont deconstruction of ROE, what is the ROE for a firm with the following: EBIT margin 0.14 Interest burden 0.8 Net after taxes 0.71 Equity multiplier Inventory turns 6.1 Asset turnover 1.7 O 0.2298 0.1916 O 0.2031 O 0.2118 O 0.2207 1.7
Q: Assume the total market value of General Motors (GM)’s capital structure is $10 billion. GM has a…
A: WACC is also known as Weighted Average Cost of Capital. It includes the cost of debt & cost of…
Q: You just returned from a trip to Italy and have 870 euros remaining. How many dollars will you…
A: Amount remaining=870 eurosExchange rate=0.9213 euros/$
Q: You want to create a portfolio that is 80% as risky as the market. You can choose to invest in…
A: The objective of the question is to determine the proportion of investment in Stock B to create a…
Q: If the tax rate is 23 percent, what is the NPV of the new plant? Note: A negative answer should be…
A: Net present value (NPV):Net present value (NPV) is a financial metric used to evaluate the…
Q: Outdoor Sports is considering adding a putt putt golf course to its facility. The course would cost…
A: Net Present Value (NPV) is a crucial financial metric used to assess the profitability of an…
Q: While on vacation in Europe, you decide to visit Britain. You estimate that you need 200 pounds for…
A: First convert Pounds to dollars=200*1.5867=317.34 dollars
Q: Calculate the annual rate of return for the new machine. (Round calculations in percentages to 2…
A: IRR (Internal Rate of Return)IRR is the discount rate at which the net present value (NPV) of cash…
Q: P17–4 LEASE VERSUS PURCHASE JLB Corporation is attempting to determine whether to lease or purchase…
A: Lease is kind of finance agreement in which equipment is used by annual payments and no initial…
Q: Home Depot has debt outstanding with a face value of $30 billion. The coupon rate on these bonds is…
A: Face value: $30 billionCoupon rate: 6.2%YTM: 7.8%Tax rate: 26%
Q: You are considering a new supplier that you estimate would reduce your costs 0.025, increasing…
A: In finance, intrinsic value signifies the inherent worth of an asset, independent of its current…
Q: Problem 17-11 Payout Policy (LO3) Surf & Turf Hotels is a mature business, although it pays no cash…
A: According to Gordon's growth model,Po= wherePo= stock priceD1= expected dividend r= required…
Q: calculate the mortgage payment for a home mortgage price costing $ 280,000. Calculate the payment…
A: A mortgage is a kind of loan that a lender or financial institution offers to people or companies to…
Q: Assume that your company is an all-equity firm with 250,000 shares outstanding. The company's EBIT…
A: No. of shares250000EbIT $ 25,00,000.00Dividend Per share $ 6.00Tax rate40%Cost of…
Q: equired information roblem 13-85 (LO 13-5) (Algo) The following information applies to the questions…
A: wage limit year 2023 for social security tax limit is $ 160,200…
Q: Seven years ago, the Goodyear Tire & Rubber Company issued a series of 20-year coupon bonds. These…
A: Number of years to maturity will be 20 years minus 7 years, i.e., 13 years.
Q: A company generates $5,000,000 in sales by selling 1.250,000 units at $4 per unit. Its variable…
A: We can solve this problem with the help of following ratios :
Q: A stock just paid a dividend of $2.41. The dividend is expected to grow at 25.68% for three years…
A: Stock value refers to the price of the stock at which the stock are being traded in the market which…
Q: The cost of installing new equipment would be debited to which of the following accounts? Oa. Land…
A: Capital costs refer to the expenses incurred in acquiring or constructing physical assets, such as…
Q: a. How many contracts must you purchase to protect your portfolio from exchange rate risk? b.…
A: a):Total exposure in dollar terms = $430,000Total exposure in pound terms = $430,000*0.57 = 245,100…
Q: a. What is the effective annual interest rate on this lending arrangement? Note: Do not round…
A: a)Monthly Interest = amount borrowed * Interest rate = 70,000,000 * 0.375%…
Q: BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it…
A: NPV means Net present value.It is computed by deducting initial investment from present value of…
Q: Metallica Bearings, Incorporated, is a young startup company. No dividends will be paid on the stock…
A: price 11 years from today=D12/(Required rate - Growth rate).=$12.50/(13.5%−5.5%).=$12.50/8%=$156.25
Q: Synovec Corporation is growing quickly. Dividends are expected to grow at a rate of 32 percent for…
A: Present value factor = 1/1 +Required…
Q: free asset. Use it to calculate the price of the call option written on that stock, as well as the…
A: An option is an agreement between two parties granting one the opportunity to purchase or sell a…
Q: roke Benjamin Co. has a bond outstanding that makes semiannual payments with a coupon rate of 5.5…
A: Yield to maturity can be calculated by following function in excel=RATE (nper, pmt, pv, [fv],…
Q: A project has annual cash flows of $7,500 for the next 10 years and then $5,500 each year for the…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: YOU TOOK A LOAN OF 100,000 DOLLAR AT AN INTEREST RATE 12% PAID MONTHLY FOR 15 YEARS PMT , PRICIPLE…
A: The loan amount is $100,000.The annual interest rate is 12%.The maturity of the loan is 15 years.The…
Q: Consider the following information on Stocks I and II: Probability of State of Economy State of…
A: State of economyProbability of state of the economyRate of return Stock IRate of return stock…
Q: Take me to the text Fill in the blanks for each of the following independent scenarios (A-D). Do not…
A: An annuity refers to periodic payments that are provided in exchange for a lump sum payment. It is…
Q: Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The…
A: Capital budgeting tools are used by investors to determine the investment's feasibility in terms of…
Q: Consider a stock that has a Beta of 0.85. You expect the long-term return on the market to be 9.75%…
A: CAPM is also known as capital asset pricing model. It helps in know the expected return on the…
Q: 18–15 VOLUNTARY SETTLEMENTS: PAYMENTS Jacobi Supply Company recently ran into certain financial…
A: A . Each creditor will be be paid 50 cents on the dollar immediately, and the debts will be…
Q: what is the new NPV of the project?
A: Information on Original problem:Cash inflows:If the franchise is awarded − $8mIf the franchise was…
Q: Which of the following measures the total risk of a portfolio? A. Standard Deviation B.…
A: The objective of the question is to identify the correct measure that quantifies the total risk of a…
Q: years. The interest rate is i(12) = 8.750%. What is the outstanding balance on the loan just after…
A: The time value of money recognizes the idea that the value of an amount of money today differs from…
Q: The current book value per share of B.L. Black & Sons is $4.5 and the required return on the stock…
A: Return on Equity (ROE) = (Expected earnings per share / Book value per share ) x100=>ROE =…
Q: How much money do you need to invest at( 23)/(4)% in order to have $12,000 after 7 years?
A: The present value of the amount that is required by an individual to invest for a fixed number of…
Q: fter a retiring from a successful business career, you would like to make a donation to your…
A: Present value of perpetual cash flows is computed as follows:-PV= wherePV= Present value of…
Q: MIRR A project has an initial cost of $60,000, expected net cash inflows of $15,000 per year for 7…
A: Initial cost: $60,000Cash inflow per annum: 15,000Number of years: 7Cost of capital: 11%
Q: This question relates to the SportHotel problem we covered in class (and is also in your textbook…
A: Information on Original problem:Cash inflows:If the franchise is awarded − $8mIf the franchise was…
Q: Gnomes R Us just paid a dividend of $1.89 per share. The company has a dividend payout ratio of 65…
A: Dividend payout ratio refers to the proportion of the dividend to the earning per share which…
Q: Several years ago the Jakob Company sold a $1,000 par value, noncallable bond that now has 20 years…
A: The objective of the question is to calculate the after-tax cost of debt for Jakob Company, which…
Q: Which of the Basel Accords introduced three pillars with a focus on the banking book? Select one: a.…
A: The three-pillar framework with a significant focus on the banking book was introduced in the Basel…
Q: Your team is considering three different projects. They aren't mutually xclusive, multiple projects.…
A: IRR stands for Internal Rate of Return, which is a financial metric used to assess the profitability…
Q: Assuming that the company wants to issue a 1000 preferred stock at the start of 2024 and has…
A: Here,No. of Preferred Shares 1000Preference Dividend is $5Required Return is 7%
Q: (a) What is the equivalent cash price of the equipment? (b) How much will be owed at the end of two…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Lopez Company is considering three alternative investment projects below: Project 1 5.1 years…
A: Net present value = Present value of cash inflows - Present value of cash outflows.
Q: P19–1 EXCHANGE RATE MOVEMENTS Suppose a basket of goods in Paris costs €133 and the same basket…
A: Variables in the question:A basket of goods in Paris costs= €133Same basket purchased in New York…
Q: Pfd Company has debt with a yield to maturity of 5.6%, a cost of equity of 12.8%, and a cost of…
A: WACC=Kd(1-t)*Wd+Ks*Ws+Kp*Wp.kd=cost of debwd=weight of debtks=cost of equityws=weight of…
Q: June Watson is contributing $1,500 each year to a Roth IRA. The IRA earns 3.9% per year. How much…
A: Future value can be calculated usingFV (rate, nper, pmt, [Pv], [type])Rate The interest rateNper…
Step by step
Solved in 3 steps with 2 images
- Adams Inc. has the following data: rRF = 5.00%; RPM = 6.00%; and b = 1.05. What is the firm's cost of common from reinvested earnings based on the CAPM? a. 12.72% O b. 11.99% c. 12.35% d. 11.64% e. 11.30%The Collins Group, a leading producer of custom automobile accessories, has hired you to estimate the firm's weighted average cost of capital. The balance sheet and some other information are provided below. Assets $ 38,000,000 101,000,000 $139,000,000 Current assets Net plant, property, and equipment Total assets Liabilities and Equity Accounts payable $ 10,000,000 9,000,000 $ 19,000,000 40,000,000 $ 59,000,000 Accruals Current liabilities Long-term debt (40,000 bonds, S1,000 par value) Total liabilities Common stock (10,000,000 shares) Retained earnings Total shareholders' equity Total liabilities and shareholders' equity 30,000,000 _50,000,000 _80,000,000 $139,000,000 The stock is currently selling for $15.25 per share, and its noncallable $1,000 par value, 20-year, 7.25% bonds with semiannual payments are selling for $875.00. The beta is 1.25, the yield on a 6-month Treasury bill is 3.50%, and the yield on a 20-year Treasury bond is 5.50%. The required return on the stock market is…Choose the correct letter of answer and provide solution The following data applies to a firm: Interest charges=P50,000.00; Sales = P300,000.00; Tax Rate=P25%; Net Profit Margin=3%. What is the firm's time interest covered ratio? a. 0.24b. 0.54c. 1.04d. 1.24e. 1.44
- using the table find the folloing for the four firms: Enterprise value to EBITDA Ratio Price-Earnings multiole PEG raio Cpmpany Market Value (OMR million) Net Income (OMR million) Earnings Growth Market Value of Equity (OMR million) Market Value of Debt (OMR million) Cash (OMR million) EBITDA (OMR million) Happy 117.95 22.5 4% 53.07 64.87 41.25 43.85 Smart 112.35 20.25 4.5% 59.53 52. 79 45 44.88 Kind 116.26 21 4.65% 69.76 46.5 63.95 28.20 Cheerful 120 24 5% 42 78 62.4 44.32Assume you are given the following information for firms A and B: A B D $1,563,400.00 $2,357,316.00 E $2,051,347.00 $1,257,431.00 Price $31.25 $31.25 i 13.52% 13.52% EBIT $97,347.00 $97,347.00 No taxes How do you replicate an investment in 79% of stock B by using stock A? What is the return of the replicating strategy?Adams Inc. has the following data: rRF = 4.00%; RPM = 7.00%; and b = 1.20. What is the firm's cost of common from retained earnings based on the CAPM? Group of answer choices 11.53% 12.40% 12.03% 11.78% 12.65%
- Choose the correct letter of answer: The following data applies to a firm: Interest Charges P10 Million, Sales/CGS P80 Million, Tax Rate 50% and Net profit margin 10%. What is the firm's interest covered ration? a. 1.6b. 2.6c. 3.6d. 4.6e. 5.6calculate the firms: d) P/E ratio given the market price above e) ROE, f) Debt-equity ratio g) Times Interest Earned Ratio, if interest and tax are 15% and 30% of sales respectively.2. Using the following information realize the top of the companies using: Method of synthetic indicator (ISC, ISG) Economic Indicator weight F1(%) F2(%) F3(%) F4(%) Net profit ratio(D) Labour productivity(D) Period of collecting receivable(I) Current liquidity(D) 0.2 200 210 98 204 0.2 100 106 99 205 0.1 200 90 202 201 0.1 201 100 200 90
- Choose the correct letter of answer and provide a solution. Thanks The financial ratios of a firm are as follows: Current Ratio=1.33; Acid-test ratio=0.80; Current liabilities=P40,000.00; Inventory turnover ratio=6 times. What is the sales/cost of good sold of the firm? *a. P57,200.00b. P77,200.00c. P97,20000d. P117,200.00e. P127,200.00As a consultant to Basso Inc., you have been provided with the following data: D1 = $0.68; P0 = $28.50; and g = 7.00% (constant). What is the cost of common from retained earnings based on the DCF approach? Group of answer choices 10.14% 9.10% 9.48% 9.39% 8.64%Give typing answer with explanation and conclusion If the company were to borrow more (or less), how would that impact the cost of debt and the WACC? Provide a specific assumed example. Weight of Equity 76.10% Weight of Debt 23.90% Cost of Equity 6.98% Cost of Debt 2.55% Tax Rate WACC 5.92%
