Reference no: EM131558596
Williams Corp is analyzing whether to take on debt to increase EPS. Currently, the firm is an all-equity firm with $2.0 million in market value and 200,000 shares outstanding. The CFO is thinking of selling $1,000,000 of debt financing and using the proceeds to buy back stock.
The cost of debt is 8% annually. If the firm’s current EBIT is $140,000, should the CEO issue the debt and buy back the stock? Additionally what is the break-even EBIT for these two capital structure scenarios?
Laura’s Dress shop had sales of $400,000, cost of goods sold of $250,000, and SG&A expense of $60,000 in 2014. If sales are expected to grow 8% in the next year, forecast the company’s EBIT in 2015 using the percentage of sales method.
New Hope Properties, LLC purchased a property 3 years ago for $500,000. At the time, they spent $200,000 to demolish the existing structures and $70,000 to clean up the lot. The property is currently worth $650,000. New Hope now wants to construct a retail shopping center on the site at a cost of $2,500,000. What amount should be used as the initial cash flow for the project?
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Performance of income measures cash flows of value
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Calculating inventory turnover
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Compute year six future value of deposits made in years
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Calculating additions to nwc
: Calculating Additions to NWC. What was the company’s 2015 change in net working capital, or NWC?
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Used as the initial cash flow for the project
: Williams Corp is analyzing whether to take on debt to increase EPS. What amount should be used as the initial cash flow for the project?
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Corporation legally pay out under the net asset test
: How much dividends or capital distributions could this Corporation legally pay out under the Net Asset test?
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What are alpha rights as to the cash payment-dividends
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Evaluate the investment options
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New state-of-the-art manufacturing facility
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