Calculate the breaka-point associated with retained earnings

Assignment Help Accounting Basics
Reference no: EM131876905

Question - The Dempere Imports Company's EPS in 2011 was $3.00, and in 2006 tio was $1.80. The companyh's payout ratiois 30%, and the stock is currently valued at $41.50. Flotation costs for new equity will be 7%. net income in 2012 is expected to be $15 million. The market-value weights of the firm's debt and equity are 40% adn 60%, respectively.

a. Based on the five-year track record, what is Dempere's EPS growth rate? What will the divideds be in 2012?

b. Calculate the firm's cost of retained earings and the cost of new common equity.

c. Calculate the breaka-point associated with retained earnings.

d. If Dempere's after-tax cost of debt is 6%, what is the WACC with retained earnings, With new common equity?

Reference no: EM131876905

Questions Cloud

Define the goals of marketing campaign for your segment : The goal of a marketing strategy is to increase sales and stay current with how a market is behaving. Present this strategy in a way that communicates.
Revenue during an economic downturn : How can price and income elasticity measures be used by businesses to help maximize their sales revenue during an economic downturn?
Affecting current global gold prices : What specific economic and political "factors" may be affecting current global gold prices?
Create and deliver a verbal communication : Create and deliver a verbal communication (recording your presentation for submission to your instructor) that aligns with your Strategic Communication Plan.
Calculate the breaka-point associated with retained earnings : The Dempere Imports Company's EPS in 2011 was $3.00, and in 2006 tio was $1.80. Calculate the breaka-point associated with retained earnings
Explain how practice of nursing is expect to grow and change : Prepare an informal presentation (500-700 words) to educate nurses about how the practice of nursing is expected to grow and change.
Prepare the journal entries to record the transactions : Prepare the journal entries to record the following transactions in Hunt Ltd's records using a perpetual inventory system
Analyze the problem using a conceptual model : Analyze the problem: This is where you identify relevant facts from the case and apply a conceptual model to diagnose the problem.
Current account deficits that are too large : 1) Why do governments prefer to avoid current account deficits that are too large?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Recommend the alternatives that you believe would be best

a client is pursuing the acquisition of corporation a that has a substantial net operating loss. corporation b is a

  The following events apply to goodman company

The following events apply to Goodman Company for 2013, its first year of operation:

  What are the challenges of management accounting

What are the challenges of management accounting? What are some of the ethical issues related to managerial accounting practices

  Activity-based costing system

Which of the following indicates that a company may benefit from an Activity-Based Costing system?

  Problem regarding the interest receivable

On June 1, 2014, MicroTel Enterprises lends $60,000 to MaxiDriver Inc. The loan will be repaid in 60 days with interest at 10%.

  Explain how an erp system can enhance internal controls

Explain how an ERP system can enhance internal controls? Specifically, how can it facilitate the separation of duties?

  Pricing the original contract

Calculate the amount of the final price adjustment because of defective pricing based on the Contractor unintentionally overpriced their material costs by $75,000 and under-priced their direct manufacturing labor costs by $50,000. Overhead rates u..

  Calculate the present value of the cost of the lease payment

On January 1, 2010, Ashly Farms leased a hay baler from Agrico Tractor Company.

  Partnership compared to a proprietorship and a corporation

Advantages of a partnership over a proprietorship and a corporation - List disadvantages of a partnership compared to a proprietorship and a corporation.

  Implementing an abc system compared to traditional costing

List two advantages and two disadvantages of implementing an ABC system compared to traditional costing.

  Your audit of garza company you find that a physical

your audit of garza company you find that a physical inventory on december 31 2012 showed merchandise with a cost of

  By indicating the sign of the effect for ioncrease - for

a repaid bank loan payable 7 million. interest was repaid seperatelyb paid cash to purchase property and equipment

Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd