Find what is duponts optimal capital budget

Assignment Help Finance Basics

Reference no: EM1344451

The management of DuPont is planning next year's capital budget. The company's earnings and dividends are growing at a constant rate of 5 percent. The last dividend, Do, was $0.90; and the current equilibrium stock price is $7.73. DuPont can raise new debt at a 14 percent before-tax cost. DuPont is at its optimal capital structure, which is 40 percent debt and 60 percent equity, and the firm's marginal tax rate is 40 percent. DuPont has the following independent, indivisible and equally risky investment opportunities:

Project Cost Rate of Return

A $15,000 17%
B $15,000 16%
C $12,000 15%
D $20,000 13%

What is DuPont's optimal capital budget?

Reference no: EM1344451

Questions Cloud

Public budgeting-type of marketable securities : Describe and discuss each and every type of Marketable Securities and Explain the major elements of the Theory of Budget Execution.

Program to use next character to create and return operator : Convert the string of digits into an integer. Otherwise, use the next character to create and return an operator.

Traks direct foreign investment : Show how would this affect Trak's direct foreign investment

Calculate the long position gain or loss : Greg recently inherited a large, family-run farm that primarily produces grain for harvest each year. Compute the long position gain or loss in this scenario.

Find what is duponts optimal capital budget : Find what is DuPont's optimal capital budget - The management of DuPont is planning next year's capital budget

Income statement including gross margin & sales general : The CEO of Smartphone Apps, LLC is making a loan application. Using the data below (only), make an Income Statement. Within this Income statement, include totals for Gross Margin,

Find the book value per share : Evaluate the book value per share, find earnings per share and calculate Haley Corporation's dividend yield

Global common denominator for valuing employees : Is there global common denominator for valuing employees, particularly related to compensation?

Creating personnel promotion application program : The following application program will be modified to accommodate the change to the database table. The personnel promotion application program.

User Account

All Pages