35. ABC Company currently sells 40,000 units of product X each year. Each unitcosts P168 to produce and sells for P200. Fixed costs are P600,000 per year. Thefirm has annual interest expense of P120,000 preferred stock dividends ofP42,000 per year, and a 30% tax rate. The degree of TOTAL leverage for LDMCompany is [round off to 2 decimal places] 37. The earnings, dividends, and stock price of ABC, Inc. are expected to grow at7 percent per year after this year. Its common stock sells for P23 per share, itslast dividend was P2.00 and will pay P2.14 at the end of the current year. It shouldpay P2.50 flotation cost. If the firm's beta is 1.75, the risk-free rate is 8 percent,and the average return on the market is 12 percent, what will be the firm's cost ofequity using the CAPM approach? [nearest %]

Hi student Since there are multiple questions, we will answer only first question.

35. ABC Company currently sells 40,000 units of product X each year. Each unit costs P168 to produce and sells for P200. Fixed costs are P600,000 per year. The firm has annual interest expense of P120,000 preferred stock dividends of P42,000 per year, and a 30% tax rate. The degree of TOTAL leverage for LDM Company is [round off to 2 decimal places]

35. ABC Company currently sells 40,000 units of product X each year. Each unit costs P168 to produce and sells for P200. Fixed costs are P600,000 per year. The firm has annual interest expense of P120,000 preferred stock dividends of P42,000 per year, and a 30% tax rate. The degree of TOTAL leverage for LDM Company is [round off to 2 decimal places]

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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