dividends

Midwest Water Works estimates that its WACC is 10.45%. The company is considering the following capital budgeting projects. Assume that each of these projects is just as risky as the firm's existing assets and that the firm may accept all the projects or only some of them. Which set of projects should be асcсepted? Project Size Rate of Return А $1 million 12.0% -Select- В 2 million 11.5 -Select- 2 million 11.2 -Select- 2 million 11.0 -Select- E 1 million 10.7 -Select- F 1 million 10.3 -Select- 1 million 10.2 -Select-

Suppose MMC Industries has calculated its external funds needed (EFN) to be $23,000,000, but now management is considering raising the previously assumed dividend payout ratio from 35% to 40%.  If the payout ratio is increased, what will happen to EFN?

Suppose your company needs $17 million to build a new assembly line. Your target debt- equity ratio is .75. The flotation cost for new equity is 10 percent, but the flotation cost for debt is only 7 percent. Your boss has decided to fund the project by borrowing money because the flotation costs are lower and the needed funds are relatively small. a. What is your company's weighted average flotation cost, assuming all equity is raised externally? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the true cost of building the new assembly line after taking flotation costs into account? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole dollar amount, e.g., 1,234,5667.) a. Flotation cost b. Amount raised %

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The Caffeine Coffee Company uses the modified internal rate of return. The firm has a cost of capital of 11 percent. The project being analyzed is as follows ($26.000 investment): Use Appendix A and Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year Cash Flow $ 12,000 11,000 9,000 What is the modified internal rate of return? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return 11.45%

7. Whitman Antique Cars Inc. has the following data, and it follows the residual dividend model. Some Whitman family members would like more dividends, and they also think that the firm's capital budget includes too many projects whose NPVS are close to zero. If Whitman reduced its capital budget to the indicated level, by how much could dividends be increased, holding other things constant? $3,000,000 $1,600,000 $3,500,000 38% Original capital budget New capital budget Net income % Debt a. $646,400 b. $808,000 c. $993,840 d. $743,360 e. $985,760

During the past few years, Super Technologies has been too constrained by the high cost of capital to make many capital investments.  Recently, though, capital costs have been declining and the company has decided to look seriously at a major expansion program that had been proposed by the marketing department.  As the assistant to the financial vice-president, it is your task is to estimate Super’s weighted average cost of capital (WACC).  The VP has provided you with the following information:   The firms’ tax rate is 40%.             The current market price of Super’s outstanding bonds is $1,153.72.  The bonds have an annual coupon rate of 12% and make coupon payments semiannually.  The bonds mature in 15 years and have a par value of $1,000.             The current price of the firm’s preferred stock is $113.10 per share.  The stock has a $100 par value and a 10% annual dividend rate (paid annually).             The current price of the firm’s common stock is $50 per share.…

Which of the following would you NOT consider when making a capital budgeting decision? A. the change in direct labor expense due to the purchase of a new machine B. the cost of a marketing study completed last year C. the opportunity to lease out a warehouse instead of using it to house a new production line D. the additional taxes a firm would have to pay in the next year