Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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A firm has net working capital of $560. Long-term debt is $3,970, total assets are $7,390, and fixed assets are $3,910. What is the amount of the total equity?
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- A firm’s current balance sheet is as follows: Assets $ 110 Debt $ 22 Equity $ 88 What is the firm’s weighted-average cost of capital at various combinations of debt and equity, given the following information? Round your answers to one decimal place. Debt/Assets After-Tax Cost of Debt Cost of Equity Cost of Capital 0 % 8 % 12 % % 10 8 12 % 20 8 12 % 30 8 13 % 40 9 14 % 50 10 15 % 60 12 16 % Construct a pro forma balance sheet that indicates the firm’s optimal capital structure. Choose the best structure from the options analyzed in part a. Compare this balance sheet with the firm’s current balance sheet. Round your answers to the nearest dollar. Assets $ 110 Debt $ Equity $ What course of action should the firm take? Round your answer to the nearest whole number. Since the firm is currently using % debt financing, it at its optimal capital structure and As a…arrow_forwardGreen Fire Company has a debt-equity ratio of 1.7. Return on assets is 14.25 percent, and total equity is $350,000. �What is its equity multiplier?arrow_forwardArredondo, Inc., has current assets of $4,957, net fixed assets of $14,890, current liabilities of $4,928, and long-term debt of $9,593. How much is net working capital?arrow_forward
- What is the net asset value of an investment company with $9,900,000 in assets, $560,000 in current liabilities, and 1,300,000 shares outstanding? Round your answer to the nearest cent. $ per sharearrow_forwardA business has a cost of equity of 9.5 percent and a pretax cost of debt of 5.4 percent. The debt - equity ratio is 1.55 and the tax rate is 25 percent. What is the unlevered cost of capital?arrow_forwardA firm has a debt total asset ratio of 74 percent and a return on total assets of 13 percent. What is the return on equity?arrow_forward
- The Maurer Company has a long-term debt ratio of 37 and a current ratio of 1.50. Current liabilities are $930, sales are $6,350, profit margin is 9.6 percent, and ROE is 19.8 percent. What is the amount of the firm's net fixed assets?arrow_forwardA firm has current assets of $1,600, net fixed assets of $6,000, accounts payable of $800, long-term debt of $2,400, equity of $4,400, sales of $7,500, costs of $5,300, and a tax rate of 35 percent. Assume costs, accounts payable, and current assets all increase at the same rate as sales. Also, assume 60 percent of net income is paid out in dividends and that the firm is currently operating at 90 percent of capacity. If sales grow at 20 percent, compute the external financing need. In your answer prepare an income statement and balance sheet (Insert a Table)arrow_forwardKing, Inc. has sales of $900,200, total assets of $1,200,100, and a profit margin of 10.68 percent. The firm has a total debt ratio of 80 percent. What is the return on equity?arrow_forward
- Blue Sun has net working capital of $800, current liabilities of $3,550, and inventory of $3,400. �What is the current ratio?arrow_forwardWhat is the net asset value of an investment company with $9,900,000 in assets, $650,000 in current liabilities, and 1,110,000 shares outstanding? Round your answer to the nearest cent. $ per sharearrow_forward5arrow_forward
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