The following facts apply to your company:   Target capital structure:          50% debt , 50% equity             EBIT:                                      $200 million             Assets:                                     $500 million             Tax rate:                                  40 percent             Cost of new and old debt:       8 percent            Based on the residual dividend policy, the payout ratio is 60 percent. How large (in millions         of dollars) will the capital budget be? $ 43.2 $ 50.0 $ 64.8 $ 86.4

1. Assume a company with 40% debt and 60% equity capital structure is considering a project that requires initial investment of $1,000,000.  The project's net operating cash flow for the first year is $50,000 and it grows at 15%, 12%, and 10% in subsequent three years.  After that it grows at a constant 5% annual rate into perpetuity.  The company's cost of debt is 8% and its cost of equity is 14%.  Its marginal tax rate is 20%.  a) Should this project be accepted assuming the company uses the same capital structure to finance it? b) Holding other things the same, what perpetual growth rate after year 4 will result in zero NPV for the project?   2. Ashford Company is considering an acquisition of a transport equipment that costs $250,000.  The equipment has estimated economic life of 5 years.  If acquired, the equipment depreciates to zero book value under the straight-line depreciation method.   Alternatively, Ashford Co can lease the equipment from Sysford, Inc. for annual beginning…

What is the internal rate of return of a capital investment project that has the followingafter-tax cash flows for a company that requires a 15% rate of return on the project?Time       Cash Flow0           -$4,0001            5002             2,000 3             5,000

Spellbound Solutions estimated future capital investment needs aré $ 1200m, and the estimated future net income is $1200m. If the company finances itself with 40 percent debt and 60 percent equity, how much in dividends can the company afford to pay? a. $0m b. $420m c. $480m d. $720m e. $900