Please solve general Accounting question Portland Plastics Inc, has the following data.If it follows the residual dividend policy, whatis its forecasted dividend payout ratio?Capital budget $12,500% Debt40%Net income (NI) $9,250a. 19.68%b. 23.65%c. 18.92%d. 17.22%e. 15.70%

Step 1: Define Dividend Payout RatioThe dividend payout ratio is a financial ratio that compares the…

Answered: Portland Plastics Inc, has the…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 6P

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ABC Inc. has the following data. If it follows the residual dividend model, what is its forecasted dividend payout ratio? Capital budget % Debt Net income (NI) Select one: a. 49.20% b. 37.20% c. 31.60% d. 39.60% e. 40.00% $7,000 40% $7,000
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Assume that your company is trying to determine its optimal capital structure, which consists only of debt and common stock. To estimate the cost of debt, the company has produced the following table: 09.86% 9.56% Percent Financed With Debt 10.16% 8.96% 9.26% 0.10 0.20 0.30 0.40 0.50 Percent Financed With Equity 0.90 0.80 0.70 0.60 0.50 Debt/Equity Ratio Now assume that the company's tax rate is 40 percent, that the company uses the CAPM to estimate its cost of common equity, Ks, that the risk-free rate is 5 percent and the market risk premium is 6 percent. Finally assume that if it has no debt its WACC would be equal to its cost of equity which would be equal to 11 percent (you should now be able to determine its "unlevered beta," bu). 0.10/0.90 0.11 0.20/0.80 0.25 Given this information, determine the firm's cost of capital if it finances with 40 percent debt and 60 percent equity. 0.30/0.70=0.43 0.40/0.600.67 0.50/0.50 = 1.00 Bond Rating AA A A BB B Before-Tax Cost of Debt 7.0% 7.2%…
Assume the following data for U&P Company: Debt (D) = $100 million; Equity (E) = $300 million; rD = 6%; rE = 12%; and TC = 30%. Calculate the after-tax weighted average cost of capital (WACC): Multiple Choice A) 10.5% B) 10.05% C) 15% D) 9.45%
Calculation of individual costs and WACC BlackRock, Inc. (BLK) has a capital structure that consists of common stock equity and debt. The market capitalization of its equity is $76.644 billion and its debt has a market value of $6.797 billion. a. Calculate the market value weights for BLK's capital structure. b. Calculate BLK's cost of equity using a beta of 1.26, a risk-free rate of 0.78%, and a market risk premium of 6.70%. c. Calculate BLK's cost of debt using a bond price of $1,067.77, semi-annual coupon payment of $28.75, and 5 years to maturity. d. Calculate BLK's current WACC using a 21% corporate tax rate. a. The market value weight of long-term debt in BLK's capital structure is %. (Round to two decimal places.)
Given the information below. Find the Weighted Average Cost of Capital Market Value of Equity = $22,000,000; Debt = $15,000,000; Cash or Cash Equivalents = $15,000,000 iD = 0.10 or 10% iMKT = 0.17 or 17% tCorp = 0.30 or 30% bK = 1.5 IRF = 0.02 = 2%
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Calculate the WACC using the following information: Debt-Equity ratio is 50%. Cost of debt is 8.00% Cost of equity is 10.00% Company pays tax at 35% a) 7.60% b) 8.40% c) 9.33% d) 9.00%
Based on the data given below, calculate the return on invested capital (ROIC). Net income = $300 NOPAT = $400 Short-term investments = $200 Stockholders' equity = $1,800 Total operating capital = $2,300 Group of answer choices 17.39% 14.91% 15.70% 16.67%
A company follows a strict residual dividend policy. It has a capital budget of $3,000,000 and a target capital structure that consists of 40% debt and 60% equity. Net income is forecast to be $2,500,000. Calculate the expected dividend payout ratio. Select one: O a. 28.00% b. 72.00% O c. 38.75% Od. 64.71% A
Grandin Inc. is evaluating its dividend policy. It has a capital budget of $625,000, and it wants to maintain a target capital structure of 60% debt and 40% equity. The company forecasts a net income of $475,000. If it follows the residual dividend policy, what is its forecasted dividend payout ratio?a. 40.61%b. 42.75%c. 45.00%d. 47.37%e.49.74

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Portland Plastics Inc, has the following data. If it follows the residual dividend policy, what is its forecasted dividend payout ratio? Capital budget $12,500 % Debt 40% Net income (NI) $9,250 a. 19.68% b. 23.65% c. 18.92% d. 17.22% e. 15.70%