Solution-Question regarding shares of outstanding common

Question regarding shares of outstanding common stock

Assignment Help Finance Basics

Reference no: EM131044486

McMichael, Inc has expected sales of $40 million. Fixed operating cost is $5 million and the variable cost ratio is 65 percent. They have outstanding debt of $10 million at an interest rate of 10 percent and $3million in a 12 percent bond. McMichael has 250,000 shares of preferred stock with a $10 dividend and 1 million shares of outstanding common stock. Their average tax rate is 35% and marginal tax rate is 40%.

1. What is the company's DOL at its current sales level.

2. What is their current DFL?

3. Forecast McMichael's EPS if sales drop to $38 million.

Reference no: EM131044486

Questions Cloud

Practice of managing accounts receivable : Managing Accounts Receivable (Trade Credit) is critical to the company's ability to manage its daily ongoing operations and the associated cash flow requirements. Describe why the practice of Managing Accounts Receivable is so significant. Conside..

Steps in the cognitive decision-making process : Explain the five perceived risks associated with hesitation of the consumer to make a purchase. Include an example of each to support. How might a marketer mitigate each of these through their marketing efforts?

Calculate the total return : Immediately after you purchase the bond, yields fall to 7% and remain at that level to maturity. Calculate the total return, if you hold the bond for 5 years and then sell. interest annual.

How did a company end up in bankruptcy court : How did a company, the leader in video rentals at the end of the 20th century, end up in bankruptcy court? Use credible sources and research to support and explain.

Question regarding shares of outstanding common stock : McMichael has 250,000 shares of preferred stock with a $10 dividend and 1 million shares of outstanding common stock. Their average tax rate is 35% and marginal tax rate is 40%.

Essay- uses selected reputable brand to analyse brand equity : A 1800 word essay that uses a selected reputable brand to analyse brand equity, the brand's potential as a result of positioning, long-term brand loyalty, and brand communications

Write a one-page letter to the editor of the clark chronicle : Using the data from the survey above, write a one-page letter to the editor of the Clark Chronicle thanking them for agreeing to cover the recycling program and summarizing the data from your survey.

Specializing in products from asia and west coast : Transitions Inc. is an importminus-export company specializing in products from Asia and the West Coast. It can borrow in the debt market at8%. Its cost of equity with40% D/V ratio is12%. Its corporate tax rate is30%. If the M&M world of taxes hol..

Evaluate the organisation health safety & security systems : Using a current workplace evaluate the Organisation's health, safety & security systems. Please ensure that you include compliance with relevant WHS legislation, staff feedback, and relevant workplace reports & forms and staff consultation process

User Account

All Pages

Question regarding shares of outstanding common stock

Reference no: EM131044486

Reference no: EM131044486

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT