Details of the capital structure of Webber Ltd. appear below:Bonds Number issued27,000Coupon rate6%Interest paymentsYears to maturityCurrent pricePreferred sharesNumber issuedDividend per shareCurrent priceCommon sharesNumber issuedNext dividend per shareDividend growth rate 6.5%Current priceFlotation costsBondssemi-annually10.$901.5 million.$2$253.5 million$3$305%Preference sharesCommon shares7%Required: The company's tax rate is 30%. Calculate the company's weighted average cost of capital6%

Weighted average cost of capital (WACC) is the average cost of capital, which can be calculated by…

Answered: Details of the capital structure of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Jordan Manufacturing reports the following capital structure: Current liabilities P100,000 ; Long-term debt 400,000 ; Deferred income taxes 10,000 ; Preferred stock 80,000 ; Common stock 100,000 ; Premium on common stock 180,000 ; Retained earnings 170,000. What is the debt ratio? A. 0.48 B. 0.49 C. 0.93 D. 0.96
The accumulated profit account of One San Miguel Co, follows: Date Item Debit Credit 07/01/2020 Balance 48,500.00 08/31/2020 Dividends paid 12/31/2020 Net income for the year 20,000.00 32,400.00 04/01/2021 Premium on capital share 06/30/2021 Gain on treasury share 15,000.00 10,000.00 09/30/2021 Dividends declared 30,000.00 12/31/2021 Net Income for the year 45,100.00 Appraisal increase of land 30,000.00 Balance 131,000.00 181,000.00 181,000.00 What is the correct balance of Accumulated Profits on December 31, 2021?
(a) Calculate current Ratio and Quick Ratio from the followinginformation:Total Assets Rs. 350000Fixed Assets Rs. 175000Investment Rs. 70000Fictitious Assets Rs. 5000Share holders fund Rs. 200000Long term Debts Rs. 100000Inventory Rs. 45000(b) From the following information calculate the stock turnoverratio.Sales Rs. 200000, G.P 25% on cost, Opening Stock was 1/3rd of thevalue of closing stock. Closing stock was 30% of sales
The company capital structure consist of debt 340000 @ 4.05%, common stock 40% of preferred stock @ 9.09% and preferred stock 400000 @ 19.50%, calculate company’s weighted average cost of capital. Select one: a. 12.50% b. 11.79% c. 14.98% d. None of the option e. 13.15%
1 Following is the Balance sheet of Jay Limited: Liabilities Equity Shares of Rs. 10 each Retained Earnings } VESHUR 6% Preference Share of Rs.10 each General Reserve Debenture Redemption Fund 5% Debentures Sundry Creditors Total Liabilities Amoun Required: Calculate value per share by using following 1. Yield Method 2. Net Assets Method t 300,000 200000 Assets Fixed Assets Allowances for Depreciation 21 13303 90,000 880,000 200,000 Current assets 5,000 Preliminary Expenses Unwritten Off Discount 25,000 60,000 Amoun t 600,000 (75,000) 340,000 10,000 5,000 Total Assets Current Assets include investments of Rs.50,000 market price of which is Rs.90,000. Debtors included in current assets are doubtful to the extent of Rs.25,000 for which no provision has been made so far. Debenture interest owes for two years and preference dividends are in arrear for two years. Earnings before tax is Rs.280,000 and Tax rate is 35%. The normal rate of dividend is 20%. 880,000
The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years: Current Year Previous YearAccounts payable $ 924,000 $ 800,000Current maturities of serial bonds payable 200,000 200,000Serial bonds payable, 10% 1,000,000 1,200,000Common stock, $10 par value 250,000 250,000Paid-in capital in excess of par 1,250,000 1,250,000Retained earnings 860,000 500,000The income before income tax was $480,000 and $420,000 for the current and previous years, respectively.a. Determine the ratio of liabilities to stockholders’ equity at the end of each year. Round to one decimal place.b. Determine the times interest earned ratio for both years.…
Using the following balance sheet, calculate net working capital: Cash Marketable Securities Accounts receivable Inventory Current assets Net fixed assets Total assets Select one: O A. $60.00 O B. $40.00 O C. $10.00 O D. $90.00 $10 Accounts payable 30 Accruals 50 Notes payable 40 Current liabilities $130 Long-term debt 100 Common equity Retained earnings $230 Total liab. & equity $20 20 50 $90 0 30 50 $230
A company has the following book value in capital structure:GHSMEquity capital (in shares of GHS 10 each, fully paid-up at par)1511% Preference capital (in shares of GHS 100 each, fully paid-up at par)1Retained earnings 2013.5% Debentures (of GHS 100 each)1015% Term Loans12.5The next year expected dividend on equity shares is GHS 3.60 per share and the dividend per share is expected to grow at 7% into the foreseeable future. The market price per share is GHS 40. Preference stock, redeemable after 10 years is currently selling at GHS 75 per share. Debentures, redeemable after six years, are selling at GHS 80 per debenture. The income-tax rate for the company is 40%Required Calculate the weighted average cost of capital of raising new capital.
From the following information, calculate Capital Employed Ratio: $ 14,00,000 4,00,000 Share Capital 9% Preference Shares Reserve and Surplus 2,00,000 Surplus i.e., Balance in Statement of Profit and.Loss 10% Debentures (Long term) 1,50,000 5,00,000 Current Liabilities 3,00,000 Fixed Assets 18,00,000 Land and Buildings 10,00,000 Current Assets 6,00,000 Inventories 5,00,000 50,000 Trade Receivables Compute Return on Capital Employed Ratio.
ABC Corporation has the following balance sheet. How much net operating working capital does the firm have? Cash Short-term investments Accounts receivable Inventory Current assets Net fixed assets Total assets O a. $285.00 O b. $15.00 O c. $68.00 O d. $82.00 Oe. $232.00 $10 Accounts payable Accruals 84 Notes payable 56 Current liabilities $150 Long-term debt 100 Common equity Retained earnings Total liab. & equity $250 $22 60 53 $135 30 30 55 $250
Question 1 The following information relates to a company listed on Luse- Mungwi PLC ZMK Issued share capital (1000 shares) Share premium. Reserves. Share holders funds. 6% Irredeemable Debentures. 9% Redeemable Debentures. Bank loan. Total Long Term Liabilities. Million 4 000 2 600 290 6,890 2,800 2,900 1 000 6 700 The current cum interest market value per k100 units is k103 and k105 fir the 6% and 9% Debentures respectively. The 9% Debenture is redeemable at par in 10 years time. The bank loan bears interest rate of 2% above the base rate (current base rate is 15%). The current ex-div market price of shares is k1, 100 and a dividend of K100 per share which is expected to grow at a rate of 5% per year has just been paid. The effective corporation tax rate for Mungwi is 30%. Required: A) Calculate the effective after tax weighted Average Cost of Capital (WACC) fir Mungwi PLC
The balance sheet for Fanning Corporation follows: Current assets $ 247,000 Long-term assets (net) 752,000 Total assets $ 999,000 Current liabilities $ 144,000 Long-term liabilities 452,000 Total liabilities 596,000 Common stock and retained earnings 403,000 Total liabilities and stockholders’ equity $ 999,000 RequiredCompute the following. (Round "Ratios" to 1 decimal place.) Working capital Current ratio Debt-to-assets ratio Debt-to-equity ratio

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