Novak Industries Corp. (NIC) has total assets of $750 million, $95 million of which are cash. It has total debt of $320 million. If NIC repurchases $45 million of its stock, what changes will occur on its balance sheet? What will its new leverage ratio be?
Q: Financial Accounting
A: Step 1: Define Cost of Goods Sold (COGS)Cost of Goods Sold (COGS) represents the direct costs…
Q: Correct answer i need
A: The Cost of Goods Sold (COGS) is the direct costs attributable to the production of the goods sold…
Q: Hi expert please give me answer general accounting question
A: Step 1: Definition of Standard Manufacturing Overhead RateThe Standard Manufacturing Overhead Rate…
Q: Help
A: To determine the fixed costs, we first calculated the total revenue by multiplying the number of…
Q: Solution
A: Concept of Manufacturing OverheadManufacturing overhead includes all indirect costs associated with…
Q: General accounting question
A: Step 1: Definition of Predetermined Overhead RateThe Predetermined Overhead Rate (POHR) is a rate…
Q: Solve clearly
A: Given Data for Last Year:Sales: $1,500,000Variable Expenses: $400,000Contribution Margin:…
Q: Provide answer
A: To calculate the Return on Equity (ROE), we use the formula:ROE = Net Income / Total EquityGiven…
Q: ???
A: Explanation of Earnings per Share (EPS):Earnings per Share (EPS) represents the portion of a…
Q: please provide correct answer
A: Step 1: Definition of Predetermined Overhead RateThe predetermined overhead rate (POHR) is a rate…
Q: Given the solution and accounting
A: Step 1: Definition of Cost of Goods Manufactured (COGM)Cost of Goods Manufactured (COGM) refers to…
Q: Financial accounting question
A: SolutionGiven Data:Debt-to-Equity Ratio (D/E) = 0.65Return on Assets (ROA) = 8.5% or 0.085Total…
Q: General accounting
A: Step 1: Define Tax Liability on Employee BenefitsThe Tax Liability on Employee Benefits is the…
Q: Calculate the overhead allocation rate using direct material cost.
A: Provided Data:Expected annual direct labor hours: 48,500 hrsExpected annual direct labor cost:…
Q: need help this ouestion
A: Step 1: Definition of Accrual Method of AccountingThe accrual method recognizes revenue when it is…
Q: What is your firm's cash conversion cycle ?
A: The Cash Conversion Cycle (CCC) is calculated using the formula:CCC = DIO + DSO - DPOWhere:Days…
Q: I want to correct answer general accounting question
A: Step 1: Calculation of Return on EquityThe company has earned $0.20 in profit for every $1 of…
Q: calculate Bethlehem's asset turnover ratio.
A: Step 1: Definition of Asset Turnover RatioAsset Turnover Ratio: The asset turnover ratio measures…
Q: Pahr Industries bases its predetermined overhead rate on the estimated labor hours for the upcoming…
A: Explanation of Predetermined Overhead Rate: The predetermined overhead rate is a calculated cost…
Q: Answer this general Accounting Question
A: Concept of Budget DeficitA Budget Deficit occurs when a government spends more money than it…
Q: What is the number of equivalent units for material costs on these accounting question?
A: Step 1: Define Equivalent Units for Material CostsEquivalent Units for Material Costs represent the…
Q: Not average for the year?
A: Step 1: Definition of Accounts Receivable Days OutstandingThe accounts receivable days outstanding…
Q: choose best answer
A: Step 1: Definition of Standard CostStandard cost per unit refers to the predetermined cost assigned…
Q: The supervisor at Golden Harvest Restaurant reviewed the daily food waste report. According to…
A: Detailed Explanation: Food Waste Variance Calculation - Golden Harvest Restaurant The restaurant's…
Q: 1. Record the proper journal entry for each transaction. 2. By the end of January, was…
A: Journal Entries(a) Purchase of Materials on AccountTransaction: $205,000 of materials purchased on…
Q: What was the direct labour cost on this job?
A: Step 1: Definition of Manufacturing OverheadManufacturing overhead refers to all indirect costs…
Q: Get correct solution this accounting question
A: Step 1: Define High-Low MethodThe High-Low Method is a cost estimation technique used in managerial…
Q: Provide correct answer with accounting question
A: Step 1: Definition of P/E RatioThe Price-to-Earnings (P/E) ratio is a financial metric that measures…
Q: provide answer please
A: (c): Standard = $8 per unit, Budgeted = $400,000 per yearThe word "standard cost" describes the…
Q: By-year-end, the firm's overhead was
A: Step 1: Definition of OverheadOverhead refers to the indirect costs incurred in running a business…
Q: kindly help me with this General accounting question
A: Step 1: DefinitionProfit Margin Ratio : The profit margin ratio measures the percentage of sales…
Q: Jensen Corp.'s $5 par value common stock is actively traded at a market value of $12 per share.…
A: Explanation of Journal Entry:A journal entry is an accounting record that documents financial…
Q: What is the average cost per unit ?
A: Concept of Total Production CostTotal production cost refers to the overall expenses incurred in…
Q: Calculate Bradley's Footwear's total assets.
A: Step 1: Definition of Return on Assets (ROA)Return on Assets (ROA) is a financial metric that…
Q: Beginning inventory: 950600, ending inventory: 420700
A: Step 1: Information givenBeginning inventory = $950,600Purchases = $825,900Ending inventory =…
Q: please provide correct solution of this General accounting question
A: Step 1: Define Interest ExpenseInterest Expense represents the cost of borrowing funds over a…
Q: None
A: The capital gains yield is calculated using the formula:Capital Gains Yield = [(Selling Price -…
Q: General accounting
A: To determine the Price-Earnings (P/E) ratio, we use the following formula:P/E=r−g1−bwhere:b =…
Q: what is the balance in the supplies account after adjustment
A: Step 1: Definition of Supplies Account AdjustmentA supplies account records the purchase of…
Q: subject : General accounting
A: The Rate of Return on Investment (ROI) is calculated using the formula: ROI = Profit Margin ×…
Q: I need help turning this into a balance sheet, income statement, and a retained earning statement…
A: First, we need to identify the type of each item. Here is the classification:Retained earnings…
Q: Solution
A: Calculation of Equivalent Units for Direct MaterialsEquivalent Units for Direct Materials = Units…
Q: provide correct answer
A: I will determine the P/E ratio using the following formula:P/E=r−g1−bwhere:b = retention ratio =…
Q: Sub. financial account
A: To determine the total materials variance, we need to break it down into two components: the…
Q: Your boss at LK Enterprises asks you to compute the company's cash conversion cycle. Looking at the…
A: The Cash Conversion Cycle (CCC) measures how long it takes a company to convert its investments in…
Q: Should the machine be replaced?
A: Step 1: Identify the Given InformationWe are given the following details:The current machine's book…
Q: I don't need ai answer general accounting question
A: Step 1: Definition of Straight-Line DepreciationStraight-line depreciation is a method of allocating…
Q: What was cowl's rate of return on assets for 2007?
A: To determine Cowl, Inc.'s rate of return on assets (ROA) for 2007, follow these steps: Step 1:…
Q: PLEASE FILL ALL CELLS. ALL RED CELLS ARE INCORRECT OR EMPTY.
A: Step 1:The amount of cash received is calculated as follows: Cash received = Sales revenue from…
Q: The predetermined overhead rate
A: Explanation of Predetermined Overhead Rate:The Predetermined Overhead Rate (POHR) is a calculated…
Can you help me with accounting questions
Step by step
Solved in 2 steps
- Letex Corp. is an all-equity company. Its assets will be worth $550 million (market value) in one year if the economy is strong, but only $350 million if the economy is weak. Both events are equally likely. The market value of the company's assets is $400 million today. The expected return for the company's stock without leverage is __%Suppose that Rose Industries is considering the acquisition of another firm in its industry for $137 million. The acquisition is expected to increase Rose's free cash flow by $5 million the first year, and this contribution is expected to grow at a rate of 4% every year thereafter. Rose currently maintains a debt to equity ratio of 1, its corporate tax rate is 21%, its cost of debt rD is 6%, and its cost of equity rE is 10%. Rose Industries will maintain a constant debt-equity ratio for the acquisition. The Free Cash Flow to Equity (FCFE) for the acquisition in year O is closest to ($ Million) (2 decimal places):The Rivoli Company has no debt outstanding, and its financial position is given by the following data: What is Rivoli’s intrinsic value of operations (i.e., its unlevered value)? What is its intrinsic stock price? Its earnings per share? Rivoli is considering selling bonds and simultaneously repurchasing some of its stock. If it moves to a capital structure with 30% debt based on market values, its cost of equity, rs, will increase to 12% to reflect the increased risk. Bonds can be sold at a cost, rd, of 7%. Based on the new capital structure, what is the new weighted average cost of capital? What is the levered value of the firm? What is the amount of debt? Based on the new capital structure, what is the new stock price? What is the remaining number of shares? What is the new earnings per share?
- Suppose Alcatel-Lucent has an equity cost of capital of 9.2%, market capitalization of $10.95 billion, and an enterprise value of $15 billion. Suppose Alcatel-Lucent's debt cost of capital is 6.9% and its marginal tax rate is 38%. a. What is Alcatel-Lucent's WACC? b. If Alcatel-Lucent maintains a constant debt-equity ratio, what is the value of a project with average risk and the expected free cash flows as shown here,? c. If Alcatel-Lucent maintains its debt-equity ratio, what is the debt capacity of the project in part (b)? a. What is Alcatel-Lucent's WACC? Alcatel-Lucent's WACC is%. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year 0 1 FCF ($ million) - 100 50 Print C Done 2 99 3 66 XSuppose Alcatel-Lucent has an equity cost of capital of 10.4%, market capitalization of $11.52 billion, and an enterprise value of $16 billion. Suppose Alcatel-Lucent's debt cost of capital is 6.6% and its marginal tax rate is 34%. a. What is Alcatel-Lucent's WACC? b. If Alcatel-Lucent maintains a constant debt-equity ratio, what is the value of a project with average risk and the expected free cash flows as shown here, ? c. If Alcatel-Lucent maintains its debt-equity ratio, what is the debt capacity of the project in part (b)? a. What is Alcatel-Lucent's WACC? Alcatel-Lucent's WACC is 9.34 %. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year 1 FCF ($ million) 45 Print 0 - 100 Done 2 101 3 66 - XSuppose that Portsea Inc. is thinking about acquiring a firm in its industry for $150 million. The acquisition is expected to increase Portsea's free cash flow by $20 million in the first year, and this contribution is expected to grow at a rate of 3% every year thereafter. Assume that Portsea currently maintains a debt-to-equity ratio of 0.80, its corporate tax rate is 30%, its cost of debt is 4%, and its cost of equity is 14% . Further assume that Portsea will maintain a constant debt - equity ratio for the acquisition. What is the free cash flow to equity (FCFE) for the acquisition in year 0 ?
- An unlevered firm has expected earnings of $2,401 and a market value of equity of $19,600. The firm is planning to issue $4,000 of debt at 6 percent interest and use the proceeds to repurchase shares at their current market value. Ignore taxes. What will be the cost of equity after the repurchase?Labrador technologies Inc. plans to become public soon. The board of directors would like to know the value of common equity and have asked for your opinion. The firm has $1,249,917 in preferred equity and the market value of its outstanding debt equals $2,049,396. The WACC for this firm is estimated to be 8.92%. For this example assume the current assets are zero. Use the DCF valuation model with the expected FCFs shown below; year 1 represents one year from today and so on. The company expects to grow at a 3.0% rate after Year 5. Rounding to the nearest penny, what is the value of common equity? Free Cash Period Flow Year 1 $1,370,274 Year 2 $1,761,479 Year 3 $1,909,652 Year 4 $2,361,090 Year 5 $2,744,645Johnson Inc. wishes to expand its facilities. The company currently has 6 million shares outstanding and no debt. The stock sells for $50 per share, but the book value per share is $20. Net income for Johnson is currently $12 million. The new facility will cost $20 million, and it will increase net income by $800,000. Johnson raises stock at the current price to finance the facility. Assume a constant price–earnings ratio. Does stock price dilution occur? (A) stock price dilution occurs. (B) stock price dilution does not occur.
- AMC Corporation currently has an enterprise value of $390 million and $120 million in excess cash. The firm has 10 million shares outstanding and no debt. Suppose AMC uses its excess cash to repurchase shares. After the share repurchase, news will come out that will change AMC's enterprise value to either $590 million or $190 million. Suppose AMC management expects good news to come out. If management wants to maximize AMC's ultimate share price, will they undertake the repurchase before or after the news comes out? When would management undertake the repurchase if they expect bad news to come out? What effect would you expect an announcement of a share repurchase to have on the stock price? To maximize its share price, when will AMC prefer to repurchase shares? (Select the best choice below.) O A. After either good or bad news comes out. B. After good news and before bad news comes out. C. Before either good or bad news comes out. D. Before good news and after bad news comes out.…X Corporation has total assets of P100 million. Earnings before interest and taxes were P20 million and the tax rate was 35%. Given are the following leverage ratios and corresponding interest rates. 1. 2. 3. 4. 5. Leverage (Debt / Total Assets) 0% 10 30 50 60 Interest Rate on Debt - 16 % 16 18 21 Calculate Litton's rate of return on equity and WACC for each amount of debt. What is the optimal capital structure? If you were the finance manager, which capital structure would you choose? Justify.Your company doesn't face any taxes and has $768 million in assets, currently financed entirely with equity. Equity is worth $51.80 per share, and book value of equity is equal to market value of equity. Also, let's assume that the firm's expected values for EBIT depend upon which state of the economy occurs this year, with the possible values of EBIT and their associated probabilities as shown below: State Probability of state Expected EBIT in state Recession 0.10 $118 million Average Boom 0.75 0.15 $193 million $253 million The firm is considering switching to a 15 percent debt capital structure, and has determined that they would have to pay a 11 percent yield on perpetual debt in either event. What will be the standard deviation in EPS if they switch to the proposed capital structure
