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Question - ABC Limited is considering issuing $10,000,000 worth of perpetual bonds yielding $600,000 interest per year. ABC currently has no debt outstanding and will use the bond proceeds to repurchase equity. ABC has 100% dividend payout ratio and EBIT is $2,000,000 per year forever. Corporate tax rate is 30%.
Required -
-If the personal tax rate is 28%, which plan (all equity or debt + equity) offers the investors the highest cash flows? Why?
-If the shareholders require a 15% return before personal taxes, what is the value of the firm under each plan? (Do not ignore personal taxes).
Single versus Dual Rates (LO 12-6) Packages-2-Go has two divisions, air express and ground service, that share the common costs of the company’s communications network, which are $4,070,000 a year. You have the following information about the two div..
Find point of indifference. XYZ Corporation is comparing two different capital structures: an all-equity plan (Plan 1) and a levered plan (Plan 2).
Refer to the data for Wilson Dover Inc. What is the value (in millions) of Wilson Dover's debt if its equity is viewed as an option?
Prepare the journal entries of the repurchases, assuming the retirement method, on April 2, 2012 and May 15, 2013
Is the company's inventory turning over at a satisfactory rate and why or why not? Does the company maintain an adequate level of inventory to meet customer demand?
Question - Determine the simple interest rate if an investment of P20,000 accumulates to P23,000 in 18 months
Determine the current portion and non current portion? Determine the balance sheet classification of the unearned portion of the revenue collected.
If the company does not maintain a TIE ratio of at least 3 to 1, then bank will refuse to renew the loan, and bankruptcy will result. What is Morrit's TIE ratio
Create and Journalize the closing entries for Brett Teddy Enterprises. normal balances listed on it's December 31st adjusted trial balance
journal entries for unexpectedly pays past-due balance on its account.1.2262009 bibby company unexpectedly pays the
You likely have read about the Sarbanes-Oxley Act. Why do you suppose Congress passed this law? In your opinion, is the law providing any benefit for the average investor? Do you think if we have enough such laws, it will eventually be impossible ..
A company has identified a takeover target with a current equity value of £2 billion. What would you recommend? Explain why
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