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A co.'s present capital structure contain 10, 00,000 equity shares and 60,000 preference shares. Thefirm's current EBIT is Rs. 6.4 million. Preference shares carry a dividend of Rs. 8 per share. The tax rateof the co. is 50%. The EPS is Rs. 2.72. The firm is planning to raise Rs. 10 million of external financing.
Two financing alternatives are being considered.
(i) Issuing 10, 00,000 equity shares of Rs. 10 each.
(ii) Issuing debenture for Rs. 10 million carrying 14% interest.
Required:-
a. Suggest the co. the alternative that maximizes the EPS of the firm.
b. Compute the EPS-EBIT indifference point.
Thress Industries just paid a divident of $1.50 a share (ie. D = $1.50). The divident is expected to grow 5% a year for the next 3 years, and then 10% a year thereafter. what is the expected divident per share for each of the next 5 years?
advertising technologies inc. ati specializes in providing both published and online advertising services for the
frantic fast foods had earnings after taxes of 1070000 in the year 2009 with 311000 shares outstanding. on january 1
a. Is their retirement plan achievable as is? b. If not, what are the alternatives that could help reconcile needs and resources? c. What is your recommendation?
The controller of Dugan corporations has collected the following monthly expense information for use in analyzing the cost behavior of maintenance costs.
The most likely (with probability 80%) value is 5 years. Assume the heat exchanger has no salvage value at the end of its useful life.
Assume the expected inflation rate to be 4 percent. If the current real rate of interest is 6 percent, what ought the nominal rate of interest be?
Havana, Inc., has identified an investment project with the following cash flows. If the discount rate is 8 percent, what is the future value of these cash flows in Year 4? What is the future value at an interest rate of 11 percent? At 24 percent?
What annual probability of default would be consistent with the yield to maturity of these bonds in mid-2009 and would you base your estimate of XYZ's equity cost of capital on your answer in part (a) or in part (d)? How does your answer to part (c)..
If a similar US dollar denominated bond yielded 6.0%, which bond has the higher yield after inflation? Is the difference less than .2%? Assume the current spot is $1.2200/E and one-year forward is $1.2450/E. Show work.
abc corp. issued a 12 20-year coupon rate bond 5 years ago. interest rates are now 8. based on semi-annual analysis
What is the dollar benefit of the system to Drugs 'R Us? (coffee) Should the firm initiate the lockbox system?
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