Capital Structure Debt @ 11% Common stock, $10 per share Total Common shares Operating plan Sales (55,000 units at $20 each) Variable costs Fixed costs Sinclair Degree of combined leverage $ 900,000 600,000 $ 1,500,000 60,000 $ 1,100,000 880,000 Degree of combined leverage Boswell Earnings before interest and taxes (EBIT) $ 220,000 The variable costs for Sinclair are $16 per unit compared to $10 per unit for Boswell. 0 0 $1,500,000 $ 1,500,000 150,000 $ 1,100,000 550,000 305,000 $ 245,000 a. If you combine Sinclair's capital structure with Boswell's operating plan, what is the degree of combined leverage? Note: Round your answer to 2 decimal places. If you combine Boswell's capital structure with Sinclair's operating plan, what is the degree of combined leverage? Note: Round your answer to the nearest whole number.
Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the load of every cost of the capital component then they're going to estimate the general cost of capital. The cost of capital refers to the return rate that an organization gives to its investors. If an organization doesn’t provide enough return, economic process will decrease the costs of their stock and bonds to revive the balance. A firm’s long-run and short-run financial decisions are linked to every other by the assistance of the firm’s cost of capital.
Cost of Common Stock
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
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