1. Following is the capital structure of a company.12% Debt CapitalCommon stock Capital (80000 shares)Total capital30 lakhs128 lakhs158 lakhsTo finance the expansion program, the company needs additional capital of Tk. 40 lakhs. Thereare three alternative methods of financing.1)Through 14% debt financingI)Through 12 % preferred stock financingI)Assume that 40% corporate tax rate and expected EBIT is Tk. 15 lakhs. You are required toSelling common stock shares of tk. 160 per share.calculate EPS under each alternative method.

Earnings Pwer share= Earnings Available for equity / Number of equity shares

Answered: Assume that 40% corporate tax rate and…

Assume that 40% corporate tax rate and expected EBIT is Tk. 15 lakhs. You are required to calculate EPS under each alternative method.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Nnana Ltd currently retains 60% of its earnings which are R6 a share this year. It earns an ROE of 30%. Assuming a required rate of return of 22%, how much would you pay for Nnana Ltd based on the earning multiplier model? a. b. C. R78.92 R79.88 R82.88 d. R70.80
If the return on asset (ROA) is 10%, the pre-tax cost of debt is 8%, and the corporate tax rate is 20%. What will the return on equity (ROE) be if the capital structure is 60% equity and 40% debt? Group of answer choices 10% 13.6% 9% 12.4%
Suppose that JB Cos. has a capital structure of 80 percent equity, 20 percent debt, and that its before-tax cost of debt is 12 percent while its cost of equity is 16 percent. Assume the appropriate weighted-average tax rate is 21 percent and JB estimates that they can make full use of the interest tax shield. What will be JB’s WACC? (Round your answer to 2 decimal places.)
An individual actually earned a 4% nominal return last year. Prices went up by 3% over the year. Given that the investment income was subject to a federal tax rate of 28% and a state and local tax rate of 6%, what was the investor's actual real after-tax rate of return? A. -0.36% B. 0.66% C. 1.45% D. 0.72%
3. (a) Debt is 20% of assets for an organization. Total assets are$10,000. The tax rate is 40%. The interest rate is 10%. EBIT profit is$1000. What is the after taxes and interest profit? What is the ROE?Profit_______________ROE________________(b) If in 1(a) debt is increased to 50% of assets, what will be the aftertaxes and interest profit and the ROE?Profit__________________ROE___________________
Suppose that $100,000 is borrowed at 8 percent and is to be repaid in three equal annual installments. Prepare a debt amortization table and show that the net present value of the after-tax cash flows of the debt is zero using the after-tax cost of debt as the discount rate. The tax rate is 40 percent.
Given the following information, what is the after-tax gain of the open-market repurchase for investors? Investors' purchase price $30.00 Repurchase price $50.00 Capital gains tax (tg) 15%
Suppose that TapDance, Inc.’s capital structure features 75 percent equity, 25 percent debt, and that its before-tax cost of debt is 9 percent, while its cost of equity is 14 percent. The appropriate weighted average tax rate is 21 percent. What will be TapDance’s WACC? (Round your answer to 2 decimal places.)
Suppose that TapDance, Inc.'s capital structure features 65 percent equity, 35 percent debt, and that its before-tax cost of debt is 8 percent, while its cost of equity is 13 percent. The appropriate weighted average tax rate is 21 percent. What will be TapDance's WACC? (Round your answer to 2 decimal places. Write your answer in percentage.)
5: Calculate Interest Coverage Ratio from the following information Net Profit (after taxes) Rs. 1,00,000 Fixed interest charges on long term borrowing = Rs. 20,000 Rate of Income Tax 50%
Suppose a firm in the 40% federal-plus-state tax bracket needs to pay $1 in dividends to its shareholders. What is the pretax income it should have to pay this dividend? $1.00 $1.67
The price earnings ratios for 4 public companies are: 5.2, 4.6, 3.4, 4.86. The after-tax capitalization rate is: a. 16.00% b. 18.08% c. 20.19% d. 22.15%

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