Now contemplating two separate capital structures for firm

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Reference no: EM131990121

1. Your grandmother has been putting $4,000 into a savings account on every birthday since your first (that is, when you turned 1). The account pays an interest rate of 7%. How much money will be in the account on your 18th birthday immediately after your grandmother makes the deposit on that birthday? The amount in the account upon your 18th birthday is $ ---------------. (Round to the nearest dollar.)

2. Tanager, Inc. just hired a new chief financial officer who is now contemplating two separate capital structures for the firm. The first structure would consist of 15,000 shares of stock. The second structure would consist of 10,000 shares of stock plus 25,000 of debt. The debt would have an interest rate of 7 percent. What is the break-even EBIT between these proposed structures? Ignore taxes.

$6,340

$5,460

$5,900

$5,250

Reference no: EM131990121

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