Reference no: EM132839908
Questions -
Q1. Delta Ltd.'s current financial year's income statement reports its net income as $1,500,000. Delta's marginal tax rate is 40% and its interest expense for the year was $15,00,000. The company has $10,000,000 of invested capital, of which 60% is debt. In addition, Delta Ltd. tries to maintain a Weighted Average Cost of Capital (WACC) of 12.6%.
(i) Compute the operating income or EBIT earned by Delta Ltd. in the current year.
(ii) What is Delta Ltd.'s Economic Value Added (EVA) for the current year?
(iii) Delta Ltd. has 2,50,000 equity shares outstanding. According to the EVA you computed in (ii), how much can Delta pay in dividend per share before the value of the company would start to decrease? If Delta does not pay any dividends, what would you expect to happen to the value of the company?
Answer all the MCQ in proper sequence in reference to managerial accounts:'
Q2. To expand the given present worth, the limited rate ought to be changed
A. Upward.
B. Descending.
C. No change.
D. Consistent.
Q3. Which type of market effectiveness expresses that current security costs completely mirror all data, both public and private?
A. Weak.
B. Semi-solid.
C. Strong.
D. Highly solid.
Q4. Which type of market proficiency expresses that current costs completely mirror the authentic succession of costs?
A. Weak.
B. Semi-solid.
C. Strong.
D. Highly solid.
Q5. ________________ is one that boosts estimation of business, limits in general expense of capital, that is adaptable, straightforward and modern, that guarantees satisfactory control on undertakings of business by the proprietors, etc.
A. Minimal capital design.
B. Moderate capital design.
C. Optimal capital design.
D. Deficit capital design.
Q6. ___________________ alludes to make-up of an association's capitalization.
A. Capital design.
B. Capital planning.
C. Value shares.
D. Profit strategy.
Q7. _____________ of various wellsprings of capital impacts capital construction.
A. Restrictive pledges.
B. Tax advantage.
C. Cost of capital.
D. Trading on value.
Q8. ___________ of obligation capital is a factor for utilizing more obligation capital.
A. Tax advantage.
B. Debt value standards.
C. Leverage impact.
D. Security of resources.
Q9. __________ is an installment of extra offers to investors in lieu of money.
A. Stock split.
B. Stock profit.
C. Extra profit.
D. Regular profit.
Q10. _______________ like limitation on business extension, on raising extra capital, on affirmation of profit, candidate chiefs on the board, convertibility statement, and so on
A. Trading on value.
B. Security of resources.
C. Restrictive agreements.
D. Debt limit of a business.
Q11. Debt limit of a business needs _____________.
A. Restriction.
B. Consideration.
C. Influence.
D. Security