Determine the after-tax net income and the expected total capital budget for the year?

Q: A Telecommunications has a target capital structure that consists of 55 percent debt and 45 percent…

A: total capital budget = $50,00,000 Debt(55%)=$27,50,000 Equity = $ 22,50,000 Dividend = net income -…

Q: Steph & Sons has a capital structure that consists of 20 percent equity and 80 percent debt.  The…

A: Capital structure can be define as the mix of different sources of capital issued by the companies…

Q: Blue Co. already determined the additional financing needed that it plans to raise through issuance…

A: = Net profit - Retained earnings = P1,800,000 - (2/3 * Net profit ) {Given} = 1,800,000 -…

Q: International Cargo Inc. which is subjected to 20% tax rate employs residual dividend policy to its…

A: To compute the dividend yield, it is necessary to calculate those variables that are major…

Q: The Alex Corp. has a target capital structure of 40% debt and 60% equity. Its capital budget for…

A: In residual dividend policy the net income after allocation for capital expenses remaining paid as…

Q: A corporation plans to buy out a supplier and needs $2 million in new capital to do so. The…

A: Cost of debt and cost of equity are two components of a company's capital structure which represent…

Q: Rain company whose tax rate is 40% has a total asset of P500,000,000 and earnings before interest…

A: Interest Payment is calculated on the debt part out of the total funds of the company. Net Income is…

Q: United Builders wants to maintain a target capital structure with 30% debt and 70% equity. Its…

A: Dividend payout ratio measures the dividend payout in relation to the net income generated by the…

Q: The capital budget forecast for the Santano Company is $725,000. The CFO wants to maintain a target…

A: Dividend payout is the level of dividends payments based on the net income of the company for a…

Q: If Sudar Products Bhd follows the residual distributions model:(ii) How much retained earnings and…

A: Residual distribution model is the method in which dividend is paid after the capital repayment has…

Q: Kahn Inc. has a target capital structure of 60% common equity and 40% debt to fund its $8 billion in…

A: For calculating growth rate, first we need to find cost of equity by using WACC equation WACC  =cost…

Q: Redwood Systems follows a strict residual dividend policy. The company estimates that its capital…

A: The dividend is a method of distributing profits among shareholders. Shareholders have the…

Q: Avant-Marlowe Technologies has a target capital structure that consists of 40% debt and 60% equity.…

A: Dividend payout ratio is that ratio which shows the payment ratio to share holder in lieu of…

Q: A company is financed through a loan with a bank at a cost of 10% effective annual rate, before…

A: given, rd=10%re=20%tax = 0.35D/E= 1

Q: Kahn Inc. has a target capital structure of 50% common equity and 50% debt to fund its $8 billion in…

A: The growth rate can be found by using the dividend discount model which is as follows:The another…

Q: National Co.’ CFO has provided the following information: · The company’s capital budget is…

A: A Residual Dividend Policy is a dividend distribution policy where amount of dividend paid is the…

Q: Harvey's Industrial Plumbing Supply's target capital structure consists of 40% debt and 60% equity.…

A: The residual dividend policy:When a company follows a residual policy, it usually meets the capital…

Q: PWC Inc. has a policy of distributing 30% of its current year income after interest and taxes. Which…

A: Company's earning after interest and taxes are divided into two parts i.e. dividend payout and…

Q: Barton Industries expects that its target capital structure for raising funds in the future for its…

A: WACC means weighted average cost of capital.It is computed as follows:-WACC =…

Q: Medtronics has a target capital structure that consists of 55% debt and 45% equity. Medtronics'…

A: As per residual dividend policy,Dividends = Net Income - (Target Equity Ratio x Total Capital…

Q: The CEO of Harlem Hardware Supplies has submitted together a capital budget of $48,500,000 for the…

A: Retained earnings breakpoint is the amount of additional capital that may be raised while…

Q: Kahn Inc. has a target capital structure of 55% common equity and 45% debt to fund its $8 billion in…

A: Weight of Equity = we = 55%Weight of Debt = wd = 45%Assets = a = $8 billionWeighted Average Cost of…

Q: Banerjee Inc. wants to maintain a capital structure with 30 percent debt and 70 percent common…

A: Maximum Capital Budget = Net income / Equity percentage

Q: Which project(s) should Berry undertake? Why?

A: Payback Period: It is a method used in capital budgeting to determine the period in which the…

Q: Kahn Inc. has a target capital structure of 60% common equity and 40% debt to fund its $11 billion…

A: Equity weight = 60% Debt weight = 40%Operating assets = $11 billionBefore-tax cost of debt = 8%WACC…

Q: Kahn Inc. has a target capital structure of 40% common equity and 60% debt to fund its $11 billion…

A: Weight of Equity = we = 40%Weight of Debt = wd = 60%Assets = a = $11 billionWeighted Average Cost of…

Q: Kahn Inc. has a target capital structure of 65% common equity and 35% debt to fund its $8 billion in…

A: Given: Particulars Debt Common equity     Weight 35% 65%     Operating assets     8 Billion…

Q: a). What is the company's expected growth vate? % b). If the firm's net income is expected to be…

A: Growth Rate:The growth rate, often referred to as the "earnings growth rate" or "revenue growth…

Q: Puckett Products is planning for $3 million in capital expenditures next year. Puckett's target…

A: Ratio analysis is a method of measuring the financial position of the organization with different…

Q: Fena Company has a capital budget of P1.2 million. The company wants to  maintain a target capital…

A: Dividend payout ratio = Dividend paid / Net Income  x 100. The residual distribution model retains a…

Q: Kahn Inc. has a target capital structure of 55% common equity and 45% debt to fund its $11 billion…

A: Capital structure refers to the sum of the debt and equity issued by the company for financing the…

Q: Berry Industries is evaluating four projects for potential inclusion in their 2016 capital budget.…

A: A company's retained profits are the profits left over after paying all direct and indirect costs,…

Q: National Co. follows a strict residual dividend policy.  The company is forecasting that its net…

A: Residual dividend are leftover dividend after the net income is used towards capital expansion as…

Q: XYZ Corp has a capital budget of $10M for next year. The company has a target capital structure of…

A: Net income means the amount left after deducting all the expenses from  the revenue. Net income is…

Q: a company will be financing its operations with and a capital budget is 40,000,000 and a debt to…

A: The weighted average cost of capital is computed using the weights and cost of debt and equity.

Q: what will be its dividend payout ratio for the current year? Interpret your answer

A: Firstly, let us understand what is residual dividend payout policy. Residual dividend policy is a…

Q: Ohio Quarry Inc. has $20 million in assets. Its expected operating income (EBIT) is $4 million and…

A: rate of return on equity = earning after interest and tax value of shareholder's equity× 100 assets…

Q: A company roll out its capital budget for the coming year at P20,000,000. The optimal capital…

A: Interest = Debt x Interest Rate A Stock Split is a corporate action which increase the no. of shares…

Q: Quigley Inc. is considering two financial plans for the coming year. Management expects sales to be…

A: ROE is the return on equity and can be measured by the dividing net income by the equity and changes…

Q: Kielly Machines Inc. is planning an expansion program estimated to cost $100 million. Kielly is…

A: Weighted average cost of capital(WACC) is the average cost of capital, which can be calculated by…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.