Common stock and percentage of debt fund

Reference no: EM1310795

Debt, common stock and percentage of debt fund.

Allensworth Motors forecasts that its earnings per share will be $3.00 this year. The company has 500 million shares of stock outstanding. Allensworth estimates that its capital budget for the upcoming year will be $800 million, and it is committed to funding the entire capital budget. The company is also committed to maintaining its dividend of $2.00 per share, and it wants to avoid issuing new common stock. The company's capital structure consists of debt and common stock. Given the above constraints, what portion of the $800 million capital budget will be funded with debt?

a.53.13%
b.46.02%
c.40.00%
d.6.25%
e.37.50%

Reference no: EM1310795

Questions Cloud

Industry wide bargaining : Taking a union role, formulate arguments for or against: Industry wide bargaining with each separate union.

Application showing files name-size and last modifiaction : Make a file by utilizing any word-processing program or the text editor. Write down an application which shows the file's name, size, and time of the last modification.

What will be the company''s dividend payout ratio : Redwood Systems and forecasting company's income- What will be the company's dividend payout ratio

Predisposition to depression : Twenty-year-old Elton inherited a predisposition to depression and was brought up by a manic-depressive mother.

Common stock and percentage of debt fund : Debt, common stock and percentage of debt fund - Given the above constraints, what portion of the $800 million capital budget will be funded with debt

Developing the fsm diagram : Develop the FSM diagram showing how to identify a DOS-like file name containing an optional leading drive letter and a colon, followed by an optional backslash, zero or more directory name isolated by the backslashes.

Psychological disorders are not violent : Most of the people with psychological disorders are not violent. However society has big problems dealing with those who are.

Evaluate the price of the company''s stock : Evaluate the Price of the company's stock following the stock split.

Computing yield to maturity if semi-annual payments is given : Present price is quoted at 98.59% of par value. Suppose semi-annual payments. Determine the yield to maturity?

User Account

All Pages