Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Firms HL and LL are identical except for their financial leverage ratios and the interest rates they pay on debt. Each has $15 million in invested capital, has $3.75 million of EBIT, and is in the 40% federal-plus-state tax bracket. Firm HL, however, has a debt-to-capital ratio of 60% and pays 11% interest on its debt, whereas LL has a 30% debt-to-capital ratio and pays only 10% interest on its debt. Neither firm uses preferred stock in its capital structure.
Calculate the return on invested capital (ROIC) for each firm. Round your answers to two decimal places.
ROIC for firm LL is %
ROIC for firm HL is %
Calculate the rate of return on equity (ROE) for each firm. Round your answers to two decimal places.
ROE for firm LL is %
ROE for firm HL is %
Observing that HL has a higher ROE, LL's treasurer is thinking of raising the debt-to-capital ratio from 30% to 60% even though that would increase LL's interest rate on all debt to 15%. Calculate the new ROE for LL. Round your answer to two decimal places.
%
Your team is looking at purchasing a piece of equipment that you anticipate will result in an estimated $15,000 reduction in expenses
A stock that pays a 1% dividend is currently trading at $40. What is the borrowing amount (B) on the 1-year call option with strike price of $40 if the volatility of the underlying stock is 20% and the continuous risk-free rate is 4%? Assume three (3..
Of the following types of securities, the holder of which type has first claim on the assets of a firm?
Interest-on-Interest Consider a $2,900 deposit earning 11 percent interest per year for 8 years. How much total interest is earned on interest (excluding interest earned on the original deposit)?
The tax rate is 33 percent. Calculate operating cash flow using the four different approaches.
If this fund sells at a 10 percent discount to NAV the day after the initial public offering, what is the value of your investment?
Gontier Corporation stock currently sells for $64.48 per share. The market requires a return of 9 percent on the firm’s stock. If the company maintains a constant 4.5 percent growth rate in dividends, what was the most recent dividend per share paid ..
With regards to financial statement and operating indicator analyses:
A U.S. Treasury bond pays 9.5 percent interest. You are in the 25 percent tax bracket. What is your after-tax yield on this bond?
If the bond matures in 6 years, what is the yield to maturity?
A firm has current assets that could be sold for their book value of $32 million. The book value of its fixed assets is $70 million, but they could be sold for $100 million today. The firm has total debt with a book value of $50 million, but interest..
What individual’s decision is altered as a result of not taxing the imputed rent earned by those who live in their own house? How so? Explain.
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd