Current Capital Structure: No DebtRecessior ExpectedABсDEFGH1CurrentProposed2 Assets3 Debt$1,000,000$1,000,000$0$800,000EBIT$700,0004 Equity$1,000,000$200,0005 Debt/Equity Ratic046 Share Price7 Shares Outstandi$4250,000$450,0008 Interest rateN/A10%91011 a) Calculate the Interest, Net income, ROE, and EPS for the current and proposed capital structure.12 b) Calculate the Breakeven EBIT.13KMNProposed Capital Structure: Debt = $800,000Recession Expected Expansion$700,000 $1,400,000 $2,100,000$1,400,000Expansion$2,100,000EBIT

a) EPS (Earnings Per Share)Current Capital Structure:For the current capital structure, there's no…

Answered: Current Capital Structure: No Debt…

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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Q39. Balance Sheet had the following amounts as at 31st March, 2019: $ Current Assets 10% Preference Share Capital Equity Share Capital 5,00,000 15,00,000 Current Liabilities Securities Premium Reserve Reserve and Surplus 1,00,000 Investments (in other companies) 4,00,000 Fixed Assets -Cots 30,00,000 Depreciation Written off Long-term from IDBI @ 9% Calculate ratios indicating the long-term and the Short-term financial position of the company. $ 12,00,000 8,00,000 2,00,000 60,00,000 14,00,000
Jordan Manufacturing reports the following capital structure: Current liabilities P100,000 ; Long-term debt 400,000 ; Deferred income taxes 10,000 ; Preferred stock 80,000 ; Common stock 100,000 ; Premium on common stock 180,000 ; Retained earnings 170,000. What is the debt ratio? A. 0.48 B. 0.49 C. 0.93 D. 0.96
15. You work for the CEO of a new company that plans to manufacture and sell a new product, a watch that has an embedded TV set and a magnifying glass crystal. The issue now is how to finance the company, with only equity or with a mix of debt and equity. Expected operating income is $510,000. Other data for the firm are shown below. How much higher or lower will the firm's expected ROE be if it uses some debt rather than all equity, i.e., what is ROEL - ROEU? Do not round your intermediate calculations. 0% Debt, U 60% Debt, L
Cost of Equity Debt ROC Capital ($ million) ($ million) (4) (8) Acme 250 125 178 Арех 1,250 417 15% 10 a-1. Calculate the economic value added for Acme and Apex. (Enter your answers In mllons rounded to 2 decimal places.) Economic value added for Acme Economic value added for Apex million million a-2. Which firm has the higher economic value added? O Acme O Apex b-1. Calculate the economic value added per dollar of Invested capital for Acme and Apex. (Round your answers to 2 decimal places.) Economic value added for Acme per dollar Economic value added for Apex per dollar
Joru
The comparative balance sheets for Metlock Corporation show the following information. December 312020 2019Cash $33,500 $12,900Accounts receivable 12,400 10,000Inventory 12,100 9,000Available-for-sale debt investments –0– 3,000Buildings –0– 29,800Equipment 44,800 19,900Patents 5,000 6,300 $107,800 $90,900Allowance for doubtful accounts $3,100 $4,500Accumulated depreciation—equipment 2,000 4,500Accumulated depreciation—building –0– 6,000Accounts payable 5,000 3,000Dividends payable –0– 4,900Notes payable, short-term (nontrade) 3,000 4,100Long-term notes payable 31,000 25,000Common stock 43,000 33,000Retained earnings 20,700 5,900 $107,800 $90,900 Additional data related to 2020 are as follows. 1. Equipment that had cost $11,000 and was 40% depreciated at time of disposal was sold for $2,500.2. $10,000 of the long-term note payable was paid by issuing common stock.3. Cash dividends paid were $4,900.4. On January…
Blazingame Inc.'s capital components have the following market values. Debt$34,030,000Preferred Stock16,500,000Common equity47,860,000 Calculate the firm's capital structure and show the weights that would be used for a weighted average cost of capital (WACC) computation. Round the values to the nearest dollar and the weights to three decimal places of percentage. Debt$ fill in the blank 1 Values Weights Debt $ _____ Preferred Stock ____ _____ Common Equity ____ _____ $ _____ _____
WACC-Book weights and market weights Webster Company has compiled the information shown in the following table: a. Calculate the weighted average cost of capital using book value weights. b. Calculate the weighted average cost of capital using market value weights. c. Compare the answers obtained in parts a and b. Explain the differences. a. The firm's weighted average cost of capital using book value weights is %. (Round to two decimal places.)
Market Value Capital Structure Suppose the Schoof Company has this book value balance sheet: value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places. Short-term debt Long-term debt Common equity Total capital $
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Required:1. How much is the net working capital of ABC Company?2. Is it positive or negative?
Current Assets P 1,375,000Property, plant and equipment 3,375,000Other non-current assets 500,000Total Assets P 5,250,000 Liabilities and Shareholders’ equity Total liabilities P 1,500,000Ordinary shares, P10 par value 4,000,000Additional paid in capital 750,000Deficit (1,000,000)Total liabilities and equity P 5,250,000The stockholders and creditors approved the quasi reorganization effective July 1,2011, to be accomplishedby a reduction in property, plant and equipment (net) P 875,000, a reduction in other non-current assets ofP375,000, and a reduction in par value from P10 to P51. Logan’s July 1 balan ce sheet after the quasi-reorganization should show total assets ofa. P 4,000,000b. P 2,500,000c. P 4,375,000d. P 3,875,0002. The balance in additional paid in capital after the quasi-reorganization on July 1 is:a. P 750,000b. P 2,000,000c. P 500,000d. P-0-3. Logan’s deficit after the quasi -reorganization on July 1,2011 should be:a. P 750,000b. P 250,000c.…

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