PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 29, Problem 25PS
a)
Summary Introduction
To determine: The required external funds of company E.
b)
Summary Introduction
To determine: The balancing item and its value if the company not to issue new shares.
c)
Summary Introduction
To determine: The balancing item and its value.
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Students have asked these similar questions
Consider the following security:
Brous Metalworks
Earnings Per Share, Time = 0
$2.00
Dividend Payout Rate
0.250
Return on Equity
0.150
Market Capitalization Rate
0.125
Required:
Using the information in the tables above, please calculate the sustainable growth rate, dividends per share, and intrinsic value per share. Then solve for the present value of growth opportunities.
(Use cells A5 to B8 from the given information to complete this question.)
Brous Metalworks
Sustainable Growth Rate
Dividends per share (Next Year)
Intrinsic Value
No-Growth Value Per Share
Present Value of Growth Opportunities (PVGO)
1. Calculate WACC of the company at current debt level.
2. Calculate expected price of BCL`s share in year 2020.
3. Find out the optimal level of debt for the company, using minimum WACC analysis.
4. Calculate Degree of operating leverage of BCL for year 2020.
a. Find Eagle's required external funds if it maintains a dividend payout ratio of 70% and plans
a growth rate of 15% in 2020.
b. If Eagle chooses not to issue new shares of stock, what variable must be the balancing
item?
c. What will be the value of this balancing item?
d. Now suppose that the firm plans instead to increase long-term debt only to $1,100 and does
not wish to issue any new shares of stock. What is now the balancing item?
e. What will be the value of this new balancing item?
Chapter 29 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 29 - Sources and uses of cash State whether each of the...Ch. 29 - Sources and uses of cash Table 29. 11 shows...Ch. 29 - Prob. 3PSCh. 29 - Sources and uses of cash and working capital...Ch. 29 - Prob. 5PSCh. 29 - Prob. 6PSCh. 29 - Cash cycle A firm is considering several policy...Ch. 29 - Collections on receivables Here is a forecast of...Ch. 29 - Collections on receivables If a firm pays its...Ch. 29 - Forecasts of payables Dynamic Futon forecasts the...
Ch. 29 - Cash budget Table 29.13 lists data from the budget...Ch. 29 - Short-term financial plans a. Paymore places...Ch. 29 - Short-term financial plans Which items in Table...Ch. 29 - Short-term financial plans Work out a short-term...Ch. 29 - Prob. 16PSCh. 29 - Prob. 17PSCh. 29 - Long-term financial plans Corporate financial...Ch. 29 - Prob. 19PSCh. 29 - Prob. 20PSCh. 29 - Long-term financial plans Construct a new model...Ch. 29 - Long-term financial plans a. Use the Dynamic...Ch. 29 - Long-term financial plans Table 29.15 summarizes...Ch. 29 - Long-term financial plans Abbreviated financial...Ch. 29 - Prob. 25PSCh. 29 - Forecast growth rate What is the maximum possible...Ch. 29 - Forecast growth rate a. What is the internal...Ch. 29 - Forecast growth rate Bio-Plasma Corp. is growing...Ch. 29 - Long-term plans Table 29.18 shows the 2019...
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