What is the companys target debtequity ratio

Assignment Help Financial Management

Reference no: EM131054839

Lorre, Inc., recently issued new securities to finance a new TV show. The project cost $14 million, and the company paid $725,000 in flotation costs. In addition, the equity issued had a flotation cost of 7 percent of the amount raised, whereas the debt issued had a flotation cost of 3 percent of the amount raised. If the company issued new securities in the same proportion as its target capital structure, what is the companys target debtequity ratio?

Reference no: EM131054839

Questions Cloud

Capital budgeting promote financial health of organization : Critically reflect on the importance of capital budgeting. Why is this such a heated subject in many boardrooms? How does capital budgeting promote the financial health of an organization? How will you use the financial techniques you have learned th..

Management expect to reduce payout-mature manufacturing firm : Antiques ‘R’ Us is a mature manufacturing firm. The company just paid a dividend of $12.00, but management expects to reduce the payout by 5.25 percent per year, indefinitely. If you require a return of 10 percent on this stock, what will you pay for..

About the nonconstant growth : Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $0.50 coming 3 years from toda..

Piece of newly purchased industrial equipment costs : A piece of newly purchased industrial equipment costs $982,000 and is classified as seven-year property under MACRS. The MACRS depreciation schedule is shown in Table 10.7. Calculate the annual depreciation allowances and end-of-the-year book values ..

What is the companys target debtequity ratio : Lorre, Inc., recently issued new securities to finance a new TV show. The project cost $14 million, and the company paid $725,000 in flotation costs. In addition, the equity issued had a flotation cost of 7 percent of the amount raised, whereas the d..

Issued perpetual preferred stock : Ezzell Corporation issued perpetual preferred stock with a 10% annual dividend. The stock currently yields 10%, and its par value is $100. What is the stock's value? Suppose interest rates rise and pull the preferred stock's yield up to 15%.

What is the beta of dells underlying business enterprise : In mid-2012, Dell Inc. had a market capitalization of $21 billion, $8 billion in debt, and $13 billion in cash. The estimated equity beta was 1.41. What is the beta of Dells underlying business enterprise?

What are the nominal and effective costs of trade credit : Grunewald Industries sells on terms of 1/10, net 30. Gross sales last year were $4,171,500, and accounts receivable averaged $438,000. Half of Grunewald's customers paid on the 10th day and took discounts. What are the nominal and effective costs of ..

What is the effective annual return on this investment : Suppose that you deposit $500 at the end of each future month into an account paying 6% (APR). How much will have in your account at the end of the 5 years? What is the effective annual return (EAR) on this investment?

User Account

All Pages