-If the company’s EBIT is OMR 500,000; market value of the equity is OMR 2,000,000 and value of Debt is OMR 4,000,000; then what is the overall cost of capital of the firm under Net Income Approach? a. 8.33% b. 10% c. 12.5% d. 25%
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A: The answer is option (c) [i.e, 20 percent ] Refer step 2 for explanation.
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Q: Explinnsion add please
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Q: None
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- 47. A cooperative has a net surplus of P10M for the fiscal year 2018. How much should be given to the members in the form of dividends or interest on their share capital? Group of answer choices At least P1,000,000 At least P2,000,000 At least P2,500,000 At least P5,000,000Based on the given information, how much is the weighted average cost of capital? *F1
- QUESTION 42 company s estimating its optimal capital structure. Now the company has a capital structure that consists of 20% debt and 80% equity, based on market values (debt to equity D/S ratio is 0.25). The risk-free rate (RF) is 5% and the market risk premium (M-[RF) is 6%. Currently the company's cost of equity, which is based on the CAPM, is 14% and its tax rate is 20%. Find the firm's current leveraged beta using the CAPM O 1.0 O 1.5 O 1.6 O 1.7 QUESTION 43 Based on the information from Question 42, find the firm's unleveraged beta using the Hamada Equation O 0.95 O 1.0 O 1.25 O 1.35 QUESTION 44 Based on the information from Question 42 and 43, what would be the company's new leveraged beta if it were to change its capital structure to 50% debt and 50% equity (D/S=1.0) using the Hamada Equation? O 1.25 O 1.35 O 1.95 O 2.25 QUESTION 45 Based on the information from Question 42 ~ 44, what would be the company's new cost of equity if it were to change its capital structure to 50%…QUESTION 4 A Company with net operating earnings of shs 300,000 is attempting to evaluate a number of possible capital structures, given below. Which of the capital structures will you recommend and why? Show your analysis. Debt After tax-Cost of Cost of equity debt (%) (%) Capital structure 1 2 3 4 5 300,000 10 400,000 10 500,000 11 600,000 12 700,000 14 12 12.5 13.5 15 18 =33-Marhaba Company’s capital structure consists entirely of long-term debt and equity. The cost of capital for each component is shown as – before tax cost of debt (kd) 8% and cost of equity (ke) 15%. The proportion of capital for each component is Debt 40% and Equity 60%. What would be weighted average cost of capital of the company? Assume that the corporate tax rate is at 40%. a. 10.92% b. 12.2% c. 10.41% d. 8.88% Clear my choice
- Debt Ratio Equity Ratio EPS DPS Stock Price 30% 70% 1.55 0.34 22.35 40% 60% 1.67 0.45 24.56 50% 50% 1.72 0.51 25.78 60% 40% 1.78 0.57 27.75 70% 30% 1.84 0.62 26.42 Which capital structure shown in the preceding table is Universal Exports Inc.’s optimal capital structure? Globex Corp. has a capital structure that consists of 40% debt and 60% equity. The firm’s current beta is 1.10, but management wants to understand Globex Corp.’s market risk without the effect of leverage. If Globex Corp. has a 25% tax rate, what is its unlevered beta?Determine Garneau's optimal capital structure based on the following information: Debt EPS DPS Stock Price 20% 2.2 1.1 40.12 30% 2.4 40% 2.6 50% 2.8 Equity 80% 70% 60% 50% O a. 20% debt; 80% equity O b. 40% debt; 60% equity O c. 50% debt; 50% equity O d. 30% debt; 70% equity 1.2 1.3 1.4 41.34 40.52 39.42YZ Goods target capital structure and other data follow: Long-term debt $ 754,000,000 Preferred stock 40,000,000 Common equity 896,000,000 Total capital $1,690,000,000 Cost of Debt (kd) = 11% for amounts up to 80 M of additional Debt; will rise to 13% after that. Cost of Preferred = 10.5% at any amount T = 40%. P0 = $23. g= 8%, and it is expected to remain constant. Assume that the company expects to have total earnings of $137.8 million in 2020. Further, it has a target payout ratio of 45 percent, so it plans to pay out 45 percent of its earnings as dividends. Flotation cost of 5% is incurred for issuance of new shares. The following projects are available for investment: Project Cost (in Millions) Rate of Return A $50…
- أنت ۱۲ أبریل 8:۲۹ م Financial Plan |Components Debt |Equity Cost Weights Weighted Cost 7.15% 5.15% Weighted Average Cost of Capital 55% FIND Debt Equity 9.90% 60% 11.50% Weighted Average Cost of Capital FIND Debt 150000 Equity 450000 7.15% C 5.15% Weighted Average Cost of Capital 7.15% 5. 15% Weighted Average Cost of Capital FIND Debt 300000 Equity 300000 FIND Answer the following questions: FIND weighted Average Capital for Financial Plan C s.650% FIND weighted Average Capital for Financial Plan A 6.050% FIND weighted Average Capital for Financial Plan B 10.540% FIND weighted Average Capital for Financial Plan D 6,150% O O DWhat is the company's cost of debt? a. 9.21%b. 10.31%c. 11.5%d. 7.73% What is the company's cost of equity using the Capital Asset Pricing Model? a. 9.21%b. 10.31%c. 11.5%d. 7.73%Table 9.1 A firm has determined its optimal capital structure which is composed of the following sources and target market value proportions. Source of Capital Long-term debt Preferred stock Common stock equity Target Market Proportions OA. 8.13 percent OB. 4.67 percent OC. 8 percent O D. 3.25 percent 20% 10 70 Debt: The firm can sell a 12-year, $1,000 par value, 7 percent bond for $960. A flotation cost of 2 percent of the face value would be required in addition to the discount of $40. Preferred Stock: The firm has determined it can issue preferred stock at $75 per share par value. The stock will pay a $10 annual dividend. The cost of issuing and selling the stock is $3 per share. Common Stock: A firm's common stock is currently selling for $18 per share. The dividend expected to be paid at the end of the coming year is $1.74. Its dividend payments have been growing at a constant rate for the last four years. Four years ago, the dividend was $1.50. It is expected that to sell, a new…
