a) The sales price for a new company would be set at 1.5 times the variable cost per unit; the VC/unit is estimated to be Rs.2.50; and fixed costs are estimated at Rs.120,000. What sales volume would be required in order to break even, i.e., to have an EBIT of zero? b) A company completed a 3-for-1 stock split. Immediately prior to the split, its stock sold for Rs.150 per share. The firm's total market value was unchanged by the split. Other things held constant, what is the best estimate of the stock's post-split price? c) A company has a capital budget of Rs.3,000,000. It wants to maintain a target capital structure that is 15% debt and 85% equity. It forecasts that its net income this year will be Rs.3,500,000. If the company follows a residual dividend policy, what will be its total dividend payment?
a) The sales price for a new company would be set at 1.5 times the variable cost per unit; the VC/unit is estimated to be Rs.2.50; and fixed costs are estimated at Rs.120,000. What sales volume would be required in order to break even, i.e., to have an EBIT of zero? b) A company completed a 3-for-1 stock split. Immediately prior to the split, its stock sold for Rs.150 per share. The firm's total market value was unchanged by the split. Other things held constant, what is the best estimate of the stock's post-split price? c) A company has a capital budget of Rs.3,000,000. It wants to maintain a target capital structure that is 15% debt and 85% equity. It forecasts that its net income this year will be Rs.3,500,000. If the company follows a residual dividend policy, what will be its total dividend payment?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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- a) The sales price for a new company would be set at 1.5 times the variable cost per unit; the VC/unit is estimated to be Rs.2.50; and fixed costs are estimated at Rs.120,000. What sales volume would be required in order to break even, i.e., to have an EBIT of zero?
b) A company completed a 3-for-1 stock split. Immediately prior to the split, its stock sold for Rs.150 per share. The firm's total market value was unchanged by the split. Other things held constant, what is the best estimate of the stock's post-split price?
c) A company has a capital budget of Rs.3,000,000. It wants to maintain a target capital structure that is 15% debt and 85% equity. It
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