Calculate component costs and break point

Assignment Help Financial Management

Reference no: EM131566542

ABC Co. has 40% debt and 60% equity, as optimal capital structure. Their stock price is 50$, last dividend distributed was $4.2 , growth rate is expected %5, corporate tax rate is 20% and flotation costs are 5%. They can borrow at 10% rate up to $15 million, above which interest rises to 12%. But if they borrow $25 million or more, interest once again rises to 14%. Their expected net income for next year is $33,6 millions, and 45% will be distributed as dividends.

a) Calculate component costs, and break point(s).

b) Calculates WACC's.

c) What is minimum acceptable return for any project undertake?

Reference no: EM131566542

Questions Cloud

Find the expected return-standard deviation of a portfolio : Find the expected return, variance, standard deviation of a portfolio with 30% of funds invested in A and 70% invested in B.

Compare and contrast theory x and theory y : Compare and contrast Theory X and Theory Y in light of your own experiences. Answer these questions using concrete examples from those experiences.

Assuming the required rate of return on the stock : Assuming the required rate of return on the stock is 10%, calculate the price per share.

Describe the organization as a whole and a specific job : Describe the organization as a whole and a specific job within this organization. Is there a formal job description?

Calculate component costs and break point : Calculate component costs, and break point(s). What is minimum acceptable return for any project undertake?

Calculate current price per share of stock : Use the P/E Multiple to estimate the terminal value, calculate the current price per share of stock.

Explain a possible benefit of a corporation using debt : Explain a possible benefit of a corporation using debt and a possible problem of having debt? Provide Examples

Majority in heckler but dissented deshaney : Why do you think Justice Brennan, Marshall and Blackmun concurred with the majority in Heckler but dissented deShaney?

Contemporary political liberal-conservative jurisprudence : How would you describe the difference between contemporary political liberal and conservative jurisprudence on judicial review of agency action.

User Account

All Pages