If NUBD Co. requires a minimum return on its investments of 15%, what is their residual income? A. P1,250,000 B. P4,500,000 C. P6,750,000 D. P750,000
Q: ABC has a return of 400,000 which is 2% more than its required return. If the cost of capital is…
A: Shareholder Equity: It can be described as the residual claim of the owners of the company after…
Q: What is the amount of the annual interest tax shield for a firm with £3 million in debt that pays…
A: Interest payment. Given the loan value = pound 3 million Interest payable =12%= So total interest =…
Q: Problem 1 Assume that ABC Corporation earns a net income of 10 million for the current period. The…
A: Residual dividend policy means it is a method that company determine the dividend to pay their…
Q: Alternative atio 30% ratio 70% FDebt 10%
A: Earnings per share per share is calculated by dividing a firm ’s profit by the number of outstanding…
Q: You have the following information about Burgundy Basins, a sink manufacturer. Equity shares…
A: As per the given information: Average-risk investment costing - $54 millionAnnual ATCF - $5.7…
Q: Q2: < DEK Corporation has ROE of 20% and a retention (plowback) ratio of 60% in 2020. Suppose the…
A: Retention ratio is the part of earnings that is retained by the company for future expansion. The…
Q: Whit is Correct option
A: To calculate the operating cash flow (OCF) for the firm, you can use the following formula: OCF =…
Q: The market value of Stan Company's equity is P15 million, and the market value of its risk free debt…
A:
Q: Suppose firm A has just earned BDT 5 per share out of which it retained BDT 3 and paid out the…
A: Given Information : Earning per share = BDT 5 Retained amount per share = BDT 3 Required rate of…
Q: Firm raises $2M in a Series B at a pre- money valuation of 10M. Later the firm raises 2M in a Series…
A: Given: Raises B series = $2 Million Pre money valuation = $10 Million
Q: What is the company’s cost of capital? 1. CAPM = rrf + (rm – rrf)B = required rate of return on…
A: 1.Risk-Free Rate (rrf) = 3% or 0.03Market Premium (rm – rrf) = 5% or 0.05Beta (B) = 1.2 Computation…
Q: Suppose Alcatel-Lucent has an equity cost of capital of 10.1%, market capitalization of $11.52…
A: Capital budgeting is the procedure of analyzing potential projects and allocating the company's…
Q: Dunlap Corp. has a market capitalization of $100 million, and $25 million in outstanding debt.…
A: The unlevered cost of capital denotes the after-tax cost of equity for a corporation that operates…
Q: You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of…
A: year 1Year 2Year 3Year 4Year 5EBITDA$78$98$113$118Depreciation$38$48$53$58Pretax…
Q: National Co. is considering the following independent, average-risk investment projects: Project…
A: Given: Net income 5 Million Project Size of project IRR V 1 Million 12.00% W 1.2 Million…
Q: Choose the correct letter of answer and provide a solution A firm has profit before tax of P63…
A: Interest coverage ratio is a financial ratio which determines how well a company can pay the…
Q: 1. Price is ten times PGI, there are 10% vacancies, operating expenses are 40% of EGI. You are…
A: Equity dividend rate = (NOI - mortgage payments)/Equity proportion Cap rate = NOI/Price DSCR =…
Q: A Corporation is planning to loan P20M at an effective interest rate of 10%. The company pays income…
A: Loan amount = P20,000,000 Interest rate = 10% Tax rate = 30%
Q: (b) Calculate the capital porpetuily where the ap
A: Capital value is the equivalent value based on time and interest rate of the future cash flow that…
Q: Plz Use excel !!! and show formula A company currently has a WACC of 10.6 percent and no debt. The…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: 12. A firm has a total market value of £30,000. It borrows £7500 at 8% interest rate. If the return…
A: Cost of Equity can be calculated as = (Earning for Equity Shareholder / Market Value of Equity) x…
Q: Company Y has a target debt ratio of 55%. Currently its debt ratio is 60% and it expects to revert…
A: The cost of debt (Kd) can be calculated by dividing the interest payments by the total liabilities.…
Q: ESS Company's current liabilities are P50,000, its long-term liabilities are P150,000, and its…
A: Long term assets are those assets which are being held by the business for longer period of time.…
Q: The current year's profits of Ferro Inc. is 1200 and the next year's profits are estimated as 1400…
A: Given, current Profit = 1200 next year profit = 1400 growth rate = (next year profit / current year…
Q: Table1: Information of the firms Unlevered firm Levered firm EBIT :10000 :10000 Interest…
A: Part A) Fill in the blanks : Putting values above :
Q: Assume that cost of debt = 8%; unlevered cost of capital = 10%; systematic risk of the asset is 1.5.…
A: Value of unlevered firm can be calculated using,EBIT = 10000Tax = 34%kUL=10% (unlevered cost of…
Q: What is the price per share based on the equity free cash flow model?
A: The stock price per share is the amount of money that you would have to pay to buy one share of a…
Q: Using the FTE approach, find the value of the firm:
A: Calculation of FCF:
Q: Alpha Corporation has average annual free cashflows to the equity holder and to the firm of…
A: Value of Equity is that money which was invested by the Equity share holder in the Company It will…
Q: If the value of a levered firm is $7 million, what is the value of the same firm with all-equity…
A: In MM model with zero taxes, the value of levered firm will be equal to value of unlevered firm.In…
Q: What is the present value of the tax shield? Assume that cost of debt = 8%; unlevered cost of…
A: Calculation of Present Value of Tax Shield:The present value of the tax shield is 1,007.41.Excel…
Q: 10 percent b. 25 percent c. 60 percent d. 80 percent
A:
Q: 19. Firm X has a Return on Equity (ROE) equal to 15%, a total debt ratic equal to 0.6. If the firm…
A: Ratio analysis of the financial statement helps in evaluating the performance of the company as…
Q: XYZ Ltd. Decides to use two financial plans and they need Rs. 50000 for investment. Plan A Plan B…
A: A financial plan is a record that contains an individual's present financial condition, long-term…
Q: Calculate the company's asset beta, if the firm's equity beta is 1.6, the debt equity ratio is 0.6…
A: The present case wants to calculate the asset beta of the firm. This is an unleveled beta for the…
Q: You have been asked to value a firm with expected annual after-tax cash flows, before debt payments,…
A: Capital structure of the firm consists of both debt and equity. Cost of raising funds from each…
Q: K-Life financial services Limited uses risk-adjusted return on capital (RAROC) to measure…
A: Let's examine the computations and offer a more thorough justification. 1. Credit to the…
Q: Jumbo Transport, an air-cargo company, expects to have earnings per share of $2.00 in the coming…
A: Given information: Earnings per share : $2 Retention ratio : 10% Return on investment : 25% Cost of…
Q: 2. Which of the two companies gives a better investment: company A with a current market value of…
A: Dividend yield- The dividend yield or dividend price ratio of a share is the dividend per share…
Q: the following Assumptions: Tangible Asset Value = 16,200,000 Required Return on Tangible Assets =…
A: We can also utilize the surplus earnings method to appraise a corporation. We must first assess the…
Q: Assume that the present value of expected ROPI follows a perpetuity with growth g (Value = Amount/…
A: The PB ratio or price-to-book ratio is a ratio that helps in measuring the market value of a company…
Q: Reconsider Examples 11.7 and 11.8. The marginal income-tax rate (tm) for Capstone is expected to…
A: A firm's Weighted Average Cost of Capital(WACC) represents the cost of capital across all the…
Q: Assume that personal and corporate taxes are given by: TC = (corporate tax rate) = 30 percent; TPS=…
A: Effective Tax Advantage: In presence of personal taxes on either interest or equity income, the…
Q: What is the ROE for a firm with a times interest earned ratio of 2, a tax liability of $1 million,…
A: Variables in the question:Times interest earned ratio=2Tax liability=$1 millionInterest…
Q: What is the EPS in the following case? Debt : Equity ratio = 3:1 Total Capital employed =…
A: Earnings per share is calculated by dividing the earnings available for equity shareholders with the…
Q: Binford Tools has an expected perpetual EBITDA equal to $67k. Its tax rate is 35%. Binford has $139k…
A: EBITDA=$67000Debt=$139000Cost of debt=6.85%Unlevered cost of capital=10.25%Tax rate=35%
If NUBD Co. requires a minimum
Step by step
Solved in 2 steps
- Make the following Assumptions: Tangible Asset Value = 16,200,000 Required Return on Tangile Assets = 16% Required Return on Equity = 24% Forecast Net Income for next period (year) = 4,800,000 Capitalization Rate for Excess earnings to compute Intangible Asset Value = 30% Current Market Value of Interest Bearing Liabilities = 12,000,000 Compute the Market Value of Equity using the Excess Earnings ApproachAssume there are two firms with a MV of $50,000,000. Firm A consists of 10% debt and 90% equity. Firm B consists of 40% debt and 60% equity. Assume perfect capital markets and M&M Proposition 2 holds. Which firm will have a higher expected return for equity holders? Why? For the toolhar prace ALT+F10/PC or ALT+FN+F10 (Mac).47. A cooperative has a net surplus of P10M for the fiscal year 2018. How much should be given to the members in the form of dividends or interest on their share capital? Group of answer choices At least P1,000,000 At least P2,000,000 At least P2,500,000 At least P5,000,000
- 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. R70.80Consider a CDO with a total notional of $500 million, consisting of three tranches: Senior (75%), Mezzanine (15%), and Equity (10%). The underlying portfolio has a total expected loss of 6%. a. Calculate the expected losses for each tranche, assuming they follow the standard tranche subordination rules. b. If the actual realized losses are 30%, determine the losses allocated to each tranche. c. Plot a graph that shows how the payoff of the holders to the Mezzanine tranche owners varies with the value of the assets in the mortgage pool at the time of maturity. d. Represent this payoff as a combination of payoffs of options and risk-free debt for Mezzanine tranche. e. Suppose the CDO manager decides to create a fourth tranche, called the Super- Senior tranche, which has the highest priority in the cash flow waterfall. If the Super-Senior tranche is sized at 50% of the total notional, recalculate the expected losses for all tranches. (hint: Super- Senior tranche is created out of Senior…Based on the information given, if the risk-free rate of interest is 3% and the market risk premium is 5%. Asset Beta Free Cash Flows (Sm) Expected Growth Rate Division Oil Exploration Oil Refining Gas & Convenience Stores 1.4 450 4.0% 1.1 525 2.5% 0.8 600 3.0% The total value of the firm is closest to: OA $21,500 O B. 531,250 OC 537,000 D.$15,000
- A firm with sales of $1,000,000, net profits after taxes of $60,000, total assots of $1,500,000, and totol liabilities of $750,000 has a return on equity ot Select one: O a. 15 percent. b. 20 percent. c. 4 percent. O d. 8 percent. e. None of the above(c) Suppose an insurance company has £350 million in capital available. The gain from an investment portfolio of this bank during 12-month period is normally distributed with a mean of £70 million and a standard deviation rate of £160 million. The insurance company considers 99% 12-month value at risk (a=2.33) for setting its economic capital. Assume the 1% tail of the loss distribution has the following values: 0.6% probability corresponds to a £700 million loss and 0.4% probability corresponds to a £20 million loss. Calculate annual risk-adjusted return on capital (RAROC) of the investment portfolio, which considers the expected tail loss.What is the size of debt for each firm? Assume that cost of debt = 8%; unlevered cost of capital = 10%; systematic risk of the asset is 1.5
- A firm has target debt-equity ratio of 0.60. The flotation cost for equity is 5% and the flotation cost for debt is 3%. The firm needs $10,000,000 investment to undertake a project. How much should the firm raise to account for flotation costs and the initial investment need of the project? O $10,395,010 O $10,416,667 $11,000,821 $10,572,912 O $10,443,864Q 2.3. An investment costs $1,000 and pays a return of $1,050. What is its rate of return? Q 2.4. An investment costs $1,000 and pays a net re Q 2.6. You buy a stock for $40 per share today. you can sell it for $45 right after the dividend is paid, what would be its dividend yield, what would be its capital gain (also quoted as a capital gain yield), and what would be its total rate of return? It will a dividend of $1 next month. If alck Com ratBlue Co. has a total liabilities of P400,000 on which 40% is a long-term liability. The non-current asset of the firm is half of the total asset and it is determined that its current ratio is 3:1. If the firm has a net profit of P144,000, what will be the return on asset? (type the answer in percentage with “%”)