Inc. recently 14.8 million, and any pal 805,000 n flotation costs. In addition, the equity issued had a flotation cost of 7.8% of the amount raised, whereas the debt issued had a Flotation cost of 3.8% of the amount raised. If Judson issued new securities in the same proportion as its target capital structure, what is the company's target debt-equity ratio? (Do not round intermediate calculations. Round the final answer to 4 decimal places.) Debt-Equity ratio

Inc. recently 14.8 million, and any pal 805,000 n flotation costs. In addition, the equity issued had a flotation cost of 7.8% of the amount raised, whereas the debt issued had a Flotation cost of 3.8% of the amount raised. If Judson issued new securities in the same proportion as its target capital structure, what is the company's target debt-equity ratio? (Do not round intermediate calculations. Round the final answer to 4 decimal places.) Debt-Equity ratio

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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Which of the following statements is the most reasonable conclusion from the given information below of ABC Company? Liabilities: P430,000 Industry average assets: P1,500,000 Equity: P415,000 Industry average liabilities: P630,000 ABC Company's debt ratio is above the industry average, which suggests it is using less debt to finance its assets than the (A average firm in the industry. ABC Company's debt ratio is below the industry average, which suggests it is using less debt to finance its assets than the (B) average firm in the industry. ABC Company's debt ratio is below the industry average, which suggests it is using more debt to finance its assets than the average firm in the industry. ABC Company's debt ratio is above the industry average, which suggests it is using more debt to finance its assets than the average firm in the industry.
In 2018, Caterpillar Inc. had about 710 million shares outstanding. Their book value was $38.0 per share, and the market price was $85.00 per share. The company's balance sheet shows that the company had $29.50 billion of long-term debt, which was currently selling near par value. a. What was Caterpillar's book debt-to-value ratio? (Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.) b. What was its market debt-to-value ratio? (Do not round intermediate calculations. Enter your answer as a decimal rounded to 2 decimal places.) c. Which measure should you use to calculate the company's cost of capital? a. Book debt-to-value ratio b. C. Markeet debt-to-value ratio Measure
F2
Sixx AM Manufacturing has a target debt-equity ratio of 2.5. Its cost of equity is 0.11, and its pretax cost of debt is 0.04. If the tax rate is 0.31, what is the company's WACC? Enter the answer with 4 decimals (e.g. 0.0123)
Fama's Llamas has a WACC of 8.8 percent. The company's cost of equity is 12 percent, and its pretax cost of debt is 6.8 percent. The tax rate is 22 percent. What is the company's target debt - equity ratio? Note: Do not round intermediate calculations and round your answer to 4 decimal places, e.g .. 32.1616.
You plan to purchase debenture bonds from one of two companies in the same industry that are similar in size and performance. The first company has $800,000 in total liabilities, and $1,200,000 in equity. the second company has $600,000 in total liabilities, and $400,000 in equity. 2. Which company's debenture bonds are less risky based on the debt-to-equity ratio? Explain. Show your calculations to support your decision.
Wainscot Industries has $50.850 of working capital, $36,320 of current liabilities, and $116,880 of long-term debt. If Wainscot's debt-to-equity ratio is 0.40, what is the total amount of Wainscot's non-current assets? O $383,000 O $485.350 O $449,030 O $358,230 O None of the above
(Financing decisions) Brussels Electronics, Inc, has total assets of $64 million and total debt of $45 million. The company also has operating profits of $23 millions with interest expenses of $7 million. a. What is Brussels Electronic's debt ratio? b. What is Brussels Electronic's time interest earned? c. Based on the information above, would you recommend to Brussels Electron-ics's management that the firm is in a strong enough position to assume more debt and increase interest expense to $9 million?
Ursala, Incorporated, has a target debt-equity ratio of 1.20. Its WACC is 8.7 percent, and the tax rate is 25 percent. a. If the company's cost of equity is 13 percent, what is its pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If instead you know that the aftertax cost of debt is 5.8 percent, what is the cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Cost of debt b. Cost of equity 6.31 % 13.39 %
Estimating Components of both WACC and DDMAn analyst estimates the cost of debt capital for Abbott Laboratories is 3.0% and that its cost of equity capital is 5.0%. Assume that ABT’s statutory tax rate is 21%, the risk-free rate is 2.1%, the market risk premium is 5%, the ABT market price is $84.10 per common share, and its dividends are $1.28 per common share.(a) Compute ABT’s average pretax borrowing rate and its market beta. (Round your answers to one decimal place.) Average borrowing rate = Market beta = (b) Assume that its dividends continue at the current level in perpetuity. Use the constant perpetuity dividend discount model to infer the market's expected cost of equity capital. (Hint: Use Price per share = Dividends per share/Cost of equity capital.) (Round your answer to one decimal place.)
The liabilities and owners’ equity for Campbell Industries is found here. What percentage of the firm’s assets does the firm now finance using debt (liabilities)? If Campbell were to purchase a new warehouse for $1.4 million and finance it entirely with long-term debt, what would be the firm’s new debt ratio?

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