A firm retains earnings of $40,000. What is the total external financing needed if this company, with $120,00 O in assets, has projected a growth rate of 8 percent? Multiple Choice Zero $3,200 $30,400 $9,600 $100,00 0
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- blue Industries has an EBIT of $12 million per year forecast in perpetuity. blue’s cost of equity is 15% and its tax rate is 28%. If Blue Industries borrows $30 million, what will be the value of the firm? Group of answer choices $76.4 million $66.0 million $80.0 million $57.6 million $30.8 millionA firm needs $200,000 to start and expects Sales $300,000Expenses $285,000Tax rate 40%a. What are earnings if the owners invest the $200,000?b. If the firm borrows 40% of the $200,000 at an interest rate of 10%, what are the firm's net earnings?c. What is the return on the owners' investment in each case? Why do the returns differ?Consider a simple firm that has the following market-value balance sheet: Assets Liabilities & Equity Debt Equity $1,030 $410 620 Next year, there are two possible values for its assets, each equally likely: $1,190 and $970. Its debt will be due with 5.1% interest. Because all of the cash flows from the assets must go either to the debt or the equity, if you hold a portfolio invested 40% in the firm's debt and 60% in its portfolio of the debt and equity in the same proportions as the firm's capital structure, your portfolio should earn exactly the expected return on the firm's assets. Show that equity will have the same expected return as the assets of the firm. That is, show that the firm's WACCi the same as the expected return on its assets. If the assets will be worth $1,190 in one year, the expected return on assets will be %. (Round to one decimal place.) If the assets will be worth $970 in one year, the expected return on assets will be %. (Round to one decimal place.) The…
- You've collected the following information about Molino, Inc.: $205,000 Sales $ 14,200 $ 9,100 $82,000 $ 63,000 Net income Dividends Total debt Total equity a. What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What growth rate could be supported with no outside financing at all? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. 9.79 8 % Sustainable growth rate b. Additional borrowing Internal growth rate a. 7,224.20 6.69 c. %24Assume that B Corp. net income for next year would be 500 million and its optimal capital budget for next year is 250 million. Also assume that the debt ratio is now 80%. What would be the maximum capital spending if B Corp decides to retain all of its earnings? A) $250 m B) $2,500m C) $4,500 m D) $450 E) $5.500 m OA OB OC OD OEAssume your organization wishes to make a Php 200,000 investment with a private equity firm in 2021. Taking into account all of the risks, the current discount rate is 12%, and the revenue stream/dividends are as follows: 2022 50002023 60002024 70002025 80002026 90002027 100002028 11000 Determine the following:a. NPV for the period 2022 through 2028;b. Total NPV using manual computation;c. Total NPV using the Excel function; andd. IRR rate.
- A firm requires an investment of $30,000 and will return $35,500 after 1 year. If the firm borrows $20,000 at 7% what is the return on levered equity? O A. 41.0% O B. 32.8% OC. 57.4% O D. 49.2%The following information is available regarding XYZ Co. sales = $250,000net income = $35,000dividends = $10,000total debt = $100,000total equity = $80,000 What growth rate can be supported without outside financing?You are given the following information on Kaleb's Heavy Equipment: Profit margin Capital intensity Debt-equity ratio Net income Dividends 18 $70,000 $ 15,200 Sustainable growth rate A Calculate the sustainable growth rate. (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
- Consider a simple firm that has the following market-value balance sheet: Assets Liabilities & Equity $1,000 Debt $400 Equity 600 Next year, there are two possible values for its assets, each equally likely: $1,190 and $960. Its debt will be due with 5.1% interest. Because all of the cash flows from the assets must go either to the debt or the equity, if you hold a portfolio of the debt and equity in the same proportions as the firm's capital structure, your portfolio should earn exactly the expected return on the firm's assets. Show that a portfolio invested 40% in the firm's debt and 60% in its equity will have the same expected return as the assets of the firm. That is, show that the firm's WACC is the same as the expected return on its assets. If the assets will be worth $1,190 in one year, the expected return on assets will be 19 %. (Round to one decimal place.) If the assets will be worth $960 in one year, the expected return on assets will be 4%. (Round to one decimal place.) -…Consider a simple firm that has the following market-value balance sheet: Assets Liabilities & Equity $1,000 Debt $400 Equity 600 Next year, there are two possible values for its assets, each equally likely: $1,200 and $960. Its debt will be due with 5.0% interest. Because all of the cash flows from the assets must go either to the debt or the equity, if you hold a portfolio of the debt and equity in the same proportions as the firm's capital structure, your portfolio should earn exactly the expected return on the firm's assets. Show that a portfolio invested 40% in the firm's debt and 60% in its equity will have the same expected return as the assets of the firm. That is, show that the firm's WACC is the same as the expected return on its assets. If the assets will be worth $1,200 in one year, the expected return on assets will be %. (Round to one decimal place.) If the assets will be worth $960 in one year, the expected return on assets will be %. (Round to one decimal place.) The…Consider a simple firm that has the following market-value balance sheet: Assets Liabilities end equity $1 040 Debt Equity $400 640 Next year, there are two possible values for its assets, each equally likely: $1 180 and $960. Its debt will be due with 4.9% interest. Because all of the cash flows from the assets must go to either the debt or the equity, if you hold a portfolio of the debt and equity in the same proportions as the firm's capital structure, your portfolio should earn exactly the expected return on the firm's assets. Show that a portfolio invested 38% in the firm's debt and 62% in its equity will have the same expected return as the assets of the firm. That is, show that the firm's pre-tax WACC is the same as the expected return on its assets. If the assets will be worth $1 180 in one year, the expected return on assets will be %. (Round to one decimal place.)
