Q: Hooray Company currently has a debt-equity ratio of 1/7. The stock price is $42 and there are…
A: 4) Given: Debt-equity ratio =1/7 Market value of equity = Stock price * Number of shares outstanding…
Q: od Values Inc. is all-equity-financed. The total market value of the firm currently is $140,000, and…
A: Due to payment of dividend prices of stock decreases and some time company dividend by the…
Q: Lara’s Inc. is currently an unlevered firm with 450,000 shares of stock outstanding, with a market…
A: Calculation of the shares investor holds of Lara’s Stock is shown below: Hence, the total number of…
Q: The owner equity accounts for Masterson International are shown here Common stock (of $1 par…
A: Working: Original Shares Outstanding = Value of Common Stock / Par Value per share = $45,000 / $1.00…
Q: St. Louis Co. and St. Romuald Co. are identical firms in all respects except for their capital…
A: Here, Interest Rate on Debt is 8%
Q: reliable Company currently is all-equity-financed. It has 10,000 shares of equity outstanding,…
A: Debt-to-equity ratio refers to those financial ratio which indicates the relative proportion of…
Q: Big Industries has the following market-value balance sheet. The stock currently sells for $20 a…
A: "Since you have posted a question with multiple sub parts, we will solve first three sub parts for…
Q: Jetpack Ltd. has an all equity capital structure. It has total assets worth $10 million, 10,000…
A: The proportionate share of each source of finance in the total capital of a company is known as its…
Q: Simone's Sweets is an all-equity firm that has 9,100 shares of stock outstanding at a market price…
A: Calculating the earnings per share (EPS) of levered firm and unlevered firm. We have,Number of stock…
Q: The Greenbriar is an all-equity firm with a total market value of $530,000 and 21,000 shares of…
A: Calculation of current market price per share:
Q: Good Values, Inc., is all-equity-financed. The total market value of the firm currently is $100,000,…
A: The value of the firm derives from the value of shares. It depends upon the repurchase decisions as…
Q: If Al Salam Firm has preferred stocks with dividends of $4,000 and the common shares outstanding…
A: Given Information: Preferred dividend is $4000 Outstanding shares is 3000 Debt of convertible bonds…
Q: Alto and Tenor have 17,400 shares of stock outstanding at a market price of $27 per share. The firm…
A: Market value of equity = 17,400 x 27 = 469,800 Value of debt = 140,000 Total capital = 469,800 +…
Q: Gamma Industries has net income of $300,000, and it has 1,875,000 shares of common stock…
A: Gamma Industries has net income of $300,000, and it has 1,875,000 shares of common stock…
Q: Beta Industries has net income of $2,000,000 and it has 1,000,000 shares of common stock…
A: given, net income = $2000,000 number of shares = $1000,000 current market price = $32 repurchase…
Q: Jetpack Ltd. has an all equity capital structure. It has total assets worth $10 million, 10,000…
A: Leverage is a method to create add a potion of debt in the capital of a company, a leveraged capital…
Q: d. If total earnings of the firm are $32,300 a year, now find earnings per share if the firm…
A: d. If total earnings of the firm are $32,300 a year, now find earnings per share if the firm…
Q: Paradise Travels is an all-equity firm that has 9,000 shares of stock outstanding at a market price…
A: Number of stock outstanding=9000Market price =$27Worth of debt=$25000Interest rate on the debt=7.3%
Q: Braxton Corp. currently has one million shares outstanding but no debt. If needed, however, the…
A: WACC = Weight in Equity * Cost of equity + Weight in debt *Cost of debt * (1- tax)
Q: The Gable Inn is an all-equity firm with 16,000 shares outstanding at a value per share of $14.50.…
A: In the given question we need to calculate the number of shares of stock will be outstanding once…
Q: Alto and Tenor have 15,000 shares of stock outstanding at a market price of $21 per share. The firm…
A: The weighted average cost of capital (WACC) is a company's average cost of capital from all sources,…
Q: MV Corporation has debt with market value of $99 million, common equity with a book value of $95…
A: WACC is the weighted average cost of capital. It is the overall cost of capital incurred in availing…
Q: Digital Fruit is financed solely by common stock and has outstanding 27 million shares with a market…
A: The question is based on the concept of market value of a firm and capital structure.
Q: Rally inc, is an all equity firm with assets worth $25B and 10B shares outstanding. Rally plans to…
A: A corporation divides its capital into units of capital that are called shares and these shares are…
Q: House of Haddock has 5,050 shares outstanding and the stock price is $145. The company is expected…
A: Dividend is distributed among the shareholders of the company out of profit earned during a…
Q: Joanne Harper, a sagacious investor, prefers the stock of a company with a higher ratio of retained…
A: Par value of Common stock= $1 Common stock = $34600 Thus, number of common stock= $34600/$1= 34600…
Q: Cross Town Cookies is an all-equity firm with a total market value of $790,000. The firm has 46,000…
A: Earnings per share: Earnings per share is the earnings available for the equity shareholders of the…
Q: Taunton's is an all-equity firm that has 150,000 shares of stock outstanding. The CFO is considering…
A: Stock outstanding= 150,000 shares Borrowing= $215,000 Interest rate= 7 percent interest…
Q: Suppose a Sam's company in CA, completes an $95 million IPO priced to the public at $50 per share.…
A: Solution We are provided with the following information Amount raised from IPO = $ 95 million = $…
Q: Bulldogs Inc. has a financial break-even point at P163,500. How much is the total preferred…
A: Financial breakeven deals with bottom line of company income statement. It is the level of EBIT at…
Q: Nacho Libre S.A. has 3,000,000 common shares outstanding that trade for $20.00 per share. The…
A: WACC = (cost of equity * weight of equity) + (cost of debt *weight of debt)
Q: FMCG Inc an all equity firm with 9200 shares outstanding with 70 percent payout is considering a…
A: Solution- (1)- No of shares ocured dignally=Value of Share had/ Price of the stock…
Q: Company A has $100,000 in debt outstanding at a rate of 6% and 200,000 shares outstanding. The…
A: Hi, since you have posted multiple questions, I will answer the first one, as per the authoring…
Q: Big Industries has the following market-value balance sheet. The stock currently sells for $20 a…
A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…
Q: At a market price of $26 per share, The Seattle, Inc. has 20,000 shares of common stock outstanding.…
A: The weighted average cost of capital (WACC) is calculated as the sum of weighted cost of each…
Q: Charleston Mills is an all-equity firm with a total market value of $221,000. The firm has 8,000…
A: given, Total market value =$221,000 shares outstanding =8000 shares
Q: Companies X and Y both wish to raise $100 million 10-year loans. Company X wishes to borrow at a…
A: If both X and Y were to directly borrow the loans of their choice, then X would end up paying 13%…
Q: The balance sheet for Tempest, Inc., is shown here in market value terms. There are 29,000 shares of…
A: it is given that: Equity 716,010 No of shares 29,000 Repurchase value 49,300
Q: Keet Industries is currently an all-equity firm that pays no taxes. The market value of the firm’s…
A: We have calculate net income before repurchase and after repurchase and from that we will get cost…
Q: Corporation will pay a dividend of $1.75 per share at this year's end and a dividend of $2.25 per…
A: The dividend discount model is a method of finding out the current price of a company’s share. It is…
Q: Blue Co., a firm that has 10,000 preferred outstanding shares, determined its financial break-even…
A:
Q: Cullumber, Inc., a high-technology firm in Portland, raised a total of $60 million in an IPO. The…
A: Given:
Q: Whim's auto has $4,300,000 in retained earnings after which the company will have to issue new…
A: Retained Earnings = $4,300,000
Q: Big Industries has the following market-value balance sheet. The stock currently sells for $20 a…
A: Income statement: Under this Statement showing the company’s performance over a period of time by…
Equity Inc. is currently an all-equity-financed firm. It has 10,000 shares outstanding that sell for $20 each. The firm has an operating income of $30,000 & pays no taxes. the firm contemplates a reconstructing that would issue $50,000 in 8% debt which will be used to repurchase stock. Show the value of the firm, EPS (earnings p. share?) and
Step by step
Solved in 3 steps with 2 images
- Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,300 shares outstanding. The firm will either pay a $1 per share dividend or repurchase $1,300 worth of stock. Ignore taxes. Assets Liabilities and Equity Cash $ 8,000 Debt $ 11,500 Fixed assets 29,500 Equity 26,000 a. What will be the subsequent price per share if the firm pays a dividend? b. What will be the subsequent price per share if the firm repurchases stock? (Round your answer to the nearest dollar.) c. If total earnings of the firm are $32,300 a year, find earnings per share if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 3 decimal places.) d. If total earnings of the firm are $32,300 a year, now find earnings per share if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 3 decimal places.) e. If total earnings of the firm are $32,300 a year,…Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,300 shares outstanding. The firm will either pay a $1 per share dividend or repurchase $1,300 worth of stock. Ignore taxes. Assets Liabilities and Equity Cash $ 8,000 Debt $ 11,500 Fixed assets 29,500 Equity 26,000 a. What will be the subsequent price per share if the firm pays a dividend? b. What will be the subsequent price per share if the firm repurchases stock? (Round your answer to the nearest dollar.) c. If total earnings of the firm are $32,300 a year, find earnings per share if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 3 decimal places.) d. If total earnings of the firm are $32,300 a year, now find earnings per share if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 3 decimal places.) e. If total earnings of the firm are $32,300 a year,…Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,260 shares outstanding. The firm will either pay a $1 per share dividend or repurchase $1,260 worth of stock. Ignore taxes. Liabilities and Assets Equity $ 7,200 Fixed assets 29,300 Debt $11,300 25,200 Cash Equity a. What will be the subsequent price per share if the firm pays a dividend? b. What will be the subsequent price per share if the firm repurchases stock? (Round your answer to the nearest dollar.) c. If total earnings of the firm are $25,500 a year, find earnings per share if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 3 decimal places.) d. If total earnings of the firm are $25,500 a year, now find earnings per share if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 3 decimal places.) e. If total earnings of the firm are $25,500 a year, find the price-earnings ratio if the…
- Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,000 shares outstanding. The firm will either pay a $1 per share dividend or repurchase $1,000 worth of stock. Ignore taxes Assets Liabilities and Equity Cash $ 2,000 Debt $10,000 Fixed assets 28,000 Equity 20,000 If total earnings of the firm are $2,000 a year, find earnings per share if the firm pays a dividend. Now find earnings per share if the firm repurchases stock. Find the price-earnings ratio if the firm pays a dividend. Find the price-earnings ratio if the firm repurchases stock. Adherents of the “dividends-are-good” school sometimes point to the fact that stocks with high dividend payout ratios tend to sell at above-average price-earnings multiples. Is Big Industries’ P/E ratio higher if it pays a dividend? Looking back at your answers to parts (a) to (f), do you think that the difference in P/E supports the…Paradise Travels is an all-equity firm that has 9,000 shares of stock outstanding at a market price of $27 a share. Management has decided to issue $25,000 worth of debt and use the funds to repurchase shares of the outstanding stock. The interest rate on the debt will be 7.3 percent. What are the earnings per share at the break-even level of earnings before interest and taxes? Ignore taxes.Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,000 shares outstanding. The firm will either pay a $1 per share dividend or repurchase $1,000 worth of stock. Ignore taxes Assets Liabilities and Equity Cash $ 2,000 Debt $10,000 Fixed assets 28,000 Equity 20,000 What will be the subsequent price per share if the firm pays a dividend? What will be the subsequent price per share if the firm repurchases stock? If total earnings of the firm are $2,000 a year, find earnings per share if the firm pays a dividend. Now find earnings per share if the firm repurchases stock. Find the price-earnings ratio if the firm pays a dividend. Find the price-earnings ratio if the firm repurchases stock. Adherents of the “dividends-are-good” school sometimes point to the fact that stocks with high dividend payout ratios tend to sell at above-average price-earnings multiples. Is Big…
- James Madison Ltd. expects a net income of 200,000. The company has 5% of 1,000,000 bonds payable. The equity capitalization rate of the company is 20%. (a) Calculate the value of the firm and average cost of capital according to the net income approach (ignoring income tax).Cross Town Cookies is an all-equity firm with a total market value of $780,000. The firm has 46,000 shares of stock outstanding. Management is considering issuing $197,000 of debt at an interest rate of 9 percent and using the proceeds to repurchase shares. Before the debt issue, EBIT will be $71,000. What is the EPS if the debt is issued? Ignore taxes. rev: 06_14_2019_QC_CS-170956 Multiple Choice $.98 $1.32 $1.55 $1.68 $1.79McPherson Pharmaceutical has common stock that is trading for $75 per share. The company paid a dividend of $5.25 last year. This dividend is expected to increase at a rate of 3% per year. What is the cost of equity capital for McPherson? If McPherson issues new shares with a flotation cost of $2 per share, what is the company’s cost of new equity?(using excel formulas)
- Tucker’s National Distributing has a current market value of equity of $10,665. Currently, the firm has excess cash of $640, total assets of $22,400, net income of $3,210, and 500 shares of stock outstanding. Tucker’s is going to use all of its excess cash to repurchase sharesof stock. What will the stock price per share be after the stockrepurchase is completed?Jimmy Shoes Inc. has 10,000 shares outstanding with a stock price of $40 per share. The current weighted average cost of capital is 7%. It also carries long-term debt of $200,000 at an interest rate of 7% p.a. One of the agenda items in its AGM is to switch to a D/E of 1. Based on this information, answer the following question: What is the level of EBIT at which shareholders will be indifferent between the two capital structures, the one with a D/E = 0.5/1 and the other with a D/E of 1?Good Values, Inc., is all-equity-financed. The total market value of the firm currently is $100,000, and there are 2,000 shares outstanding. The firm has declared a $5 per share dividend. Now suppose that instead of paying a dividend Good Values plans to repurchase $10,000 worth of stock. Ignore taxes. a. What will be the stock price before and after the repurchase? b. Suppose an investor who holds 200 shares sells 20 of her shares back to the firm. If there are no taxes on dividends or capital gains, show that she should be indifferent between the repurchase and the dividend. c. Show that if dividends are taxed at 30% and capital gains are not taxed, the value of the firm is higher if it pursues the share repurchase instead of the dividend.
