User Account

All Pages

What would be the company new stock price

Assignment Help Financial Accounting
Reference no: EM132955242

Question - Blue Sky Berhad currently has RM200,000 debt outstanding carrying a coupon rate of 6 %. Its earnings before interest and taxes (EBIT) are RM100,000, and it is a zero-growth company. The company's cost of equity is 10 %, and its tax rate is 27%. The company has 10,000 shares of common stock outstanding. The dividend payout ratio is 100%.

Blue Sky Berhad is considering recalling the 6 % debt by issuing RM400,000 new 7 % debt. The new funds would be used to replace the old debt and to repurchase stock at the existing price. It is estimated that the increase in riskiness resulting from the leverage increase would cause the required rate of return on equity to increase to 11 %. If this plan is carried out, what would be the company's new stock price?

Reference no: EM132955242

Questions Cloud

What is the current value for twin oaks : Assume that Twin Oaks's bond had a semiannual coupon but 20 years remaining to maturity. What is the current value under these conditions?
What would be the likely effect to Acme operating cycle : What would be the likely effect to Acme's operating cycle if the company changes its current policy that sales upon credit must be paid within 3 months
Explain the overall effect each error : Prepare consolidated financial statements and related accounting entries for incorporated entities - List the accounts and amounts, which are incorrect
Calculate the balance of the invoice for scarlet company : Scarlet Company received an invoice for $51,000.00, If it made a partial payment of $15,500.00 during the discount period, calculate the balance of the invoice.
What would be the company new stock price : Blue Sky Berhad is considering recalling the 6 % debt by issuing RM400,000 new 7 % debt. What would be the company new stock price
What discount rate should Florida use : Assume a risk-free rate of 5% and a market risk premium of 8%. Florida's tax rate is 40%. What discount rate should Florida use
Calculate the balance on the invoice after partial payment : Calculate the balance on the invoice after the partial payment was made. Evan received an invoice for $4,000 that had payment terms of 4/10 n/30.
What is system analysis : What is System Analysis? What is a Feasibility Analysis? What are the components of a feasibility Analysis? What contribution would a budget supervisor make
Calculate the amount that must be paid on december : If the payment terms are 3/7, 2/30, n/60, calculate the amount that must be paid on December 28, 2014 to settle all three invoices.

Reviews

Write a Review

Financial Accounting Questions & Answers

  What is the return on the portfolio

You have $2,162 invested in Stock A and $657 invested in Stock B. If the returns on these stocks are 5.56% and 19.66%, respectively, what is the return

  Determine the expected portfolio return

Determine the expected portfolio return, rp, for each of the 6 years. Evaluate the expected value of portfolio returns, rp, (line over the r) over the 6-year period

  Discuss differences between the cost and revaluation model

Discuss the differences between the Cost model and the Revaluation model. Provide a recommendation in your conclusion

  Prepare the journal entry to record the impairment

An estimated useful life of 10 years with a salvage value of $150 000. Prepare the journal entry to record the impairment

  What is the amount of impairment loss to be recorded

What is the amount of impairment loss to be recorded at 12/31/2020 assuming the asset is being will be held for use in the future.

  Record all the journal entries required by cardinal corp

Record all the journal entries required by Cardinal Corp to account for this consignment. On July 2, Cardinal Corp. ships merchandise costing $ 460,000

  What would be the value of investment in barr reported

What would be the value of investment in Barr reported in 12/31/2017 balance sheet (i.e., the amortized cost of Barr on 12/31/2017)?

  Calculate the amount if any of joyces earned income credit

Joyce, a widow, lives in an apartment with her two minor children (ages 8 and 10), whom she supports. Joyce earns $33,000 during 2014. She uses the standard deduction. Calculate the amount, if any, of Joyce’s earned income credit.

  Management trainee by earrings unlimited

You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at..

  For units-of-production and double declining-balance

Dave’s Pizza bought a used Toyota delivery van on January 2, 2014, for $28,600. The van was expected to remain in service for four years (154,000 miles). Prepare a schedule of depreciation expense per year for the van under the three depreciation met..

  What was the cash flow from financing activities

What Old is New, a resale shop in Houston's Heights, Sold equipment for $250000, What was the cash flow from financing activities?

  Prepare tabular analysis of the september transactions

On August 31, the balance sheet of La Brava Veterinary Clinic showed Cash $9,000, Accounts Receivable $1,700, Supplies $600, Equipment $6,000, Accounts Payable $3,600, Common Stock $13,000, and Retained Earnings $700. Prepare a tabular analysis of th..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd