Calculate the equity multiplier

Assignment Help Financial Management
Reference no: EM131608853

You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $30.50 million in assets with $29.25 million in debt and $1.25 million in equity. LotsofEquity, Inc. finances its $30.50 million in assets with $1.25 million in debt and $29.25 million in equity. Calculate the debt ratio. (Round your answers to 2 decimal places.) Debt ratio Lots of Debt % Lots of Equity % Calculate the equity multiplier. (Round your answers to 2 decimal places.) Equity multiplier Lots of Debt times Lots of Equity times Calculate the debt-to-equity. (Round your answers to 2 decimal places.) Debt-to-equity Lots of Debt times Lots of Equity times.

Reference no: EM131608853

Questions Cloud

Maximum allowable payback period is three years : Compute the payback statistic for Project B if the appropriate cost of capital is 12 percent and the maximum allowable payback period is three years.
Create a project management plan for your client : Create a project management plan for your client that outlines how you will implement the HRIS in Gladwell Grocery Stores.
Discuss the problem of the comma-separated values : A comma-separated values (CSV) file is a simple text format used to store a list of records. A comma is used as a delimiter to separate the fields.
Prepare an income statement and retained earnings statement : Prepare an income statement, retained earnings statement, and balance sheet analyzing your findings using the questions below, in a total of 1,050 words.
Calculate the equity multiplier : Calculate the equity multiplier.
State the purpose for government mandates : Give three (3) examples of penalties that organizations induce when they fail to comply with government mandates such as OSHA or EEO.
Company existing reporting systems : What are some workarounds to get data if not provided by the company's existing reporting systems?
Balance in accounts receivable : What is the year-end 2015 balance in accounts receivable for Mr. Husker’s Tuxedos?
What are the main differences : what are the main differences? What suggestions do you have or have you seen that will enhance a group presentation? Please answer in 100-200 words.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the depreciation tax shield for this project in year

Your firm needs a machine which costs $270,000, and requires $42,000 in maintenance for each year of its 7 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 7-year class life category. Assume a tax rate of 40% ..

  Coupon bonds outstanding-common stock-preferred stock

Debt: 5,000 6 percent coupon bonds outstanding, $1,000 par value, 23 years to maturity, selling for 103 percent of par; the bonds make semiannual payments. Common stock: 105,000 shares outstanding, selling for $61 per share; the beta is 1.1. Find the..

  An investment offers a total return

An investment offers a total return of 14 percent over the coming year. Bill Bernanke thinks the total real return on this investment will be only 8.6 percent.

  What is the estimated required rate of return on stock

Woidtke Manufacturing's stock currently sells for $17 a share. The stock just paid a dividend of $1.50 a share (i.e., D0 = $1.50), and the dividend is expected to grow forever at a constant rate of 3% a year. What stock price is expected 1 year from ..

  Difficulties during the american revolution

Which of the following was NOT one of Britain's difficulties during the American Revolution?

  The cost of preferred stock

The cost of preferred stock is:

  What is the after-tax WACC for the firm

A firm has $80 million in debt and 60% of its capital structure consists of common equity. The firm has no preferred stock. The firm’s bonds have YTM of 8.5%, and the firm is subject to a 30% corporate tax rate. The firm has common stock with a beta ..

  What is the pretax required return on gordon stock

What is the pretax required return on Gordon’s stock?

  What dividend per share will they declare for fiscal year

If Delta's managers want to follow a constant nominal dividend policy, what dividend per share will they declare for fiscal year 2009?

  What is the price of the floating-rate preferred stock

What is the price of the floating-rate preferred stock most likely to be? What is the price of the straight preferred stock likely to be?

  How much is the lockbox system worth on annual basis

Hardin-Gehr Corporation (HGC) began operations 5 years ago as a small firm serving customers in the Detroit area. However, its reputation and market area grew quickly. Would this be a one-time cash flow or a recurring one, assuming the company ceases..

  What is Tom effective annual rate

During the year the stock paid dividends of $7.03 per share. What is Tom’s effective annual rate?

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