Reference no: EM131326905
Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 775,000 shares of stock outstanding. Under Plan II, there would be 525,000 shares of stock outstanding and $9.75 million in debt outstanding. The interest rate on the debt is 7 percent, and there are no taxes.
Use M&M Proposition I to find the price per share of equity. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
Share price $
What is the value of the firm under Plan I? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
Value of the firm $
What is the value of the firm under Plan II? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
Value of the firm $
|
Compute the company cost of debt capital
: Assume that the interest rate on a comapny's debt is 6% and that the company's tax rate is 35%. Compute the company's cost of debt capital.
|
|
Use to protect itself against transaction exposure
: There are three types of hedges that a firm can use to protect itself against transaction exposure. Choose one of them and explain it. Give an example as well to illustrate.
|
|
Calculate the copy department costs allocated to sales
: Triton Company's copy department, which does almost all of the photocopying for the sales department and the administrative department, budgets the following costs for the year, based on the expected activity of copies: Assuming the following copies ..
|
|
Earnings to fuel growth-current share price
: Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $14 per share dividend 10 years from today ..
|
|
What is the value of the firm under plan
: Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 775,000 shares of stock outstanding. Use M&M Proposition I to find the price per share of e..
|
|
What is its? after-tax cost of? debt
: Avicorp has a $13.5 million debt issue? outstanding, with a 6.1% coupon rate. The debt has? semi-annual coupons, the next coupon is due in six? months, and the debt matures in five years. It is currently priced at 96% of par value. If Avicorp faces a..
|
|
Explain why we refer to the opportunity of cost of capital
: Opportunity Cost of Capital: Explain why we refer to the opportunity of cost of capital, instead of just "cost of capital" or "discount rate." While you're at it, also explain the following statement: "the opportunity cost of capital depends on the p..
|
|
Disadvantages of outsourcing functions in the value chain
: What is the yield to maturity on a 15-year, zero coupon bond selling for 37.5% of par value? Using an example, discuss the advantages and disadvantages of outsourcing functions in the value chain.
|
|
What is the amount of the firm net fixed assets
: The Caughlin Company has a long-term debt ratio of .40 and a current ratio of 1.20. Current liabilities are $960, sales are $6,380, profit margin is 9.3 percent, and ROE is 20.1 percent. What is the amount of the firm’s net fixed assets?
|