User Account

All Pages

Financial leverage of the company

Assignment Help Finance Basics
Reference no: EM131429236

Five Star, Inc. financed its total assets by 50% of equity and 50% of debts. The equity had a beta of 1.2. The financial managers in the company decided to reduce the financial leverage of the company by changing the capital structure as 20% of equity and 80% of debts. Since the business lines of the company did not have any change, the beta of assets of the firm should keep the same. The tax rate of the firm is 30%. What should be the beta of the equity after the firm changed its capital structure? Show me step by step with the formulas.

Reference no: EM131429236

Questions Cloud

Define convenience yield : Define convenience yield. Can the convenience yield ever be zero? Under what conditions? What is the relationship between convenience yield and the cost of borrowing a commodity?
Why is response rate concern for survey researchers : Why is response rate a concern for survey researchers? Are there other issues that should be of greater concern? Treaties become legally binding when approved by whom?
Compute pt ltds profits tax liability : Compute PT Ltd's profits tax liability, if any, for the year of assessment 2015/16. Ignore provisional profits tax. Show all your workings
How many units does jeanne need to sell to break even : Jeanne Co. has annual fixed costs of $200,000 and variable costs of $2/unit for a product that sells for $12 unit. How many units does Jeanne need to sell to break even?
Financial leverage of the company : Five Star, Inc. financed its total assets by 50% of equity and 50% of debts. The equity had a beta of 1.2. The financial managers in the company decided to reduce the financial leverage of the company by changing the capital structure as 20% of eq..
Discuss about the necrophobia : Necrophobia is the fear of death or dead things. This is a very common fear, especially after the loss of a loved one. This fear is a sort of defense mechanism of the mind. This can also be a very difficult phobia to overcome because of the uncert..
What is the cash conversion cycle : Define (1) what is the cash conversion cycle and (2) how the cash conversion cycle is calculated. Also define how it is calculated by component. Identify ways by component that an organization can improve its cash conversion cycle.
Identifying faulty arguments in the literature : Write a short advertisement for your herb using at least two faulty arguments. Label them in parentheses in red text.
Determine the dynamic reactions at a and b : Each of the two triangular plates shown has a mass of 5 kg and is welded to a vertical shaft AB. Knowing that the assembly rotates at the constant rate ω=8 rad/s, determine the dynamic reactions at A and B.

Reviews

Write a Review

Finance Basics Questions & Answers

  Determine the firm''s cost of capital

Given the following information interest rate                        8% tax rate                              30%

  Describe the two ways whereby capital market securities pass

Describe the two ways whereby capital market securities pass from the issuer to the public.

  Objective type questions on payback period, npv and irr

Objective type questions on payback period, NPV and IRR and what is the internal rate of return on this project

  Why boppoland have higher level of public good provision

Boppoland has the same number of people as Zorroland, with the same average income as Zorroland, but the distribution of incomes is wider. Why might Boppoland have a higher level of public good provision than Zorroland?

  Revenues and other operating costs are expected to be

your company csus inc. is considering a new project whose data are shown below. the required equipment has a 3-year

  Discuss the truth in lending act

Discuss the Truth in Lending Act and what role it places in financial and regulatory reports requirements in regards to funds acquisition strategies. What are various important terms which must be disclosed and their meaning?

  Compute rate of return on the portfolio

Use the information in the previous problem and consider a portfolio with weights of .60 in stocks and .40 in bonds.

  Decide whether you consider it to be a valid measure

Decide whether you consider it to be a valid measure. Explain why or why not. Decide whether you consider it to be a reliable measure. Explain why or why not.

  What role do investment bankers often play

What role do investment bankers often play in the merger negotiation process? What is a tender offer? When and how is it used?

  Prepared meals for corporate aircraft

Meals on Wings Inc., which supplies prepared meals for corporate aircraft, needs to purchase new broilers. The new broilers would replace broilers purchased 10 years ago for $105,000, which are being depreciated on a straight-line basis to a zero ..

  Your parents are giving you 120 a month for 4 years while

your parents are giving you 120 a month for 4 years while you are in college. at a 5 percent discount rate what are

  Report on the debt structure of united utilities group and

a. quantify the existing gearing level of the united utilites for 3 years should be connected to the rules of

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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