4"Var/Fixed12% increase% change4,000,000SalesVariable Cost (60%)VFixed CostF1,000,000Operating Income(EBIT)InterestF250,000EBTTaxes (34%)VEarnings After TaxesPreferred DividendsF150,000Earnings available tocommon stockholdersEarnings per shareassuming 50,000sharesCalculate The Degree of Financial Leverage4.88x4.89x

Step 1: To calculate the degree of financial leverage (DFL), you can use the following formula:…

Answered: 4 "Var/Fixed 12% increase % change…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.5.2MBA: Financial leverage Costco Wholesale Corporation (COST) and Wel-Mart Stroes Inc. (WMT)reported the...

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YZ 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…
atab=r1&sl=en&tl%3Dar&text%3DThe%20company's%20 = Google Translate The company's capital structure is as follows: Debt Weight 25%, Preferred Stock Weight 25%, Common equity Weight 50%. The cost of debt is 12%, the cost of preferred stock is 15% and the cost of common equity is 0.191. Calculate the company's weighted average cost of capital. Select one: a. 0.0655 b. 0.1255 C. All the given choices are not correct d. 0.1630 e. 0.1330 Clear my choice haykal almakha aldiyn 12 Type here to search Esc F1 F2 F3 F4 F5 F6 F7 F8 @ #3 24 * 2 T 3.
14. Adjusted WACC. Clark Explorers, Inc., an engineering firm, has the follow- ing capital structure: Market price Outstanding units Book value Cost of capital a. 35% b. 25% Equity $30.00 120,000 $3,000,000 15% c. 15% d. 5% Preferred Stock $110.00 10,000 $1,000,000 12% Debt Using market value and book value (separately, of course), find the adjusted WACC for Clark Explorers at the following tax rates: $955.00 6,000 $6,000,000 9%
Question 14 Your company has compiled the following data which is based on current costs relative to its sources of external capital ie long-term debt, preferred stock and common stock equity for various ranges of financing. Source of Capital Long-term debt After-tax Cost Range of Total New Financing 4 % 0 to 1697594 8 1697595 to 3259148 12 3259149 to above Preferred stock 17 0 to 936034 22 936035 to above Common stock equity 18 0 to 1141333 21 1141334 to 2808705 25 2808705 to 3549127 26 3549127 to above Current retained earnings in coming year Cost of retained earnings based on current earnings 628988 18 % The target capital structure proportions are: Target capital structure Long-term debt 32 % Preferred stock 11 % Equity 57 % Calculate the WACC prior to the firm exhausting its retained earnings Answer 3 The firm expects its range of total new financing to be Calculate the WACC based on new range. 3156574 Answer 3
Global Technology's capital structure is as follows: Debt Preferred stock Common equity 15% 50 35 The aftertax cost of debt is 8.50 percent; the cost of preferred stock is 12.00 percent; and the cost of common equity (in the form of retained earnings) is 15.50 percent. Calculate the Global Technology's weighted cost of each source of capital and the weighted average cost of capital. Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places. Debt Preferred stock Common equity Weighted average cost of capital Weighted Cost % %
Percent of capital structure: Preferred stock Common equity (retained earnings) Debt Additional information: Corporate tax rate Dividend, preferred Dividend, expected common Price, preferred Growth rate Bond yield Flotation cost, preferred Price, common 15% 45 40 35% Debt Preferred stock Common equity (retained earnings) Weighted average cost of capital $ 8.00 $ 3.50 $ 105.00 98 8% $ 10.40 $ 78.00 Calculate the weighted average cost of capital for Digital Processing Incorporated Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. Weighted Cost 5.20 % 8.33 11.50 25.03 %
Please use excel formulas Current dividend Years until dividend ceases Required return (Use cells A6 to B8 from the given information to complete this question.) Output area: Share price $9.45 13 10.70% ?
Canvas C. compute the earnings per share for the three financing packages by completing the table below: Financial Package 3 Operating earnings in million - interest expense in million - Earnings available in million No. of Shares Earnings per share d. complete the table below for each of the three financing packages based on three assumptions for the return on assets shown below; Financial Packages Annual (ROA) 1 least leverage 3 most leverage 15% 10% 5% F1 DII F2 F3 F4 prt sc
Why do you deduct or subtract 1 to flotation cost? Example: Given; Annual dividend (D) = $4.75 Flotation cost (F) = 0.05 or 5% Number of shares issued (N) = 10,000 Stock price (P0) = $50 Formula; Total value able to receive = N * P0 * (1 - F) Total value able to receive = 10,000 * $50 * (1 - 0.05) Total value able to receive = $500,000 * 0.95 Total value able to receive = $475,000
Financial leverage Costco Wholesale Corporation (COST) and Wel-Mart Stroes Inc. (WMT)reported the following data (in milllions) for a recent year: Compute the return on stockholders equity. Round to one decimal place.
The Cost of Equity and Flotation Costs Messman Manufacturing will issue common stock to the public for $30. The expected dividend and the growth in dividends are $3.00 per share and 5%, respectively. If the flotation cost is 10% of the issue’s gross proceeds, what is the cost of external equity, re?
Financial leverage MicrosoCortrepotied (MSFT) reported the following data (in millions) for a tern year Compute the profit margin, asset turnover, and financial leverage metrics using the expandedDuPont formula. Round profit margin, asset turnover, and financial leverage to two decimalplaces.Round return on stockholders’ equity to one decimal place.

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