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Project Size of Project Project IRR Project V P1.0 million 12.0% Project W 1.2 million 11.5 Project X 1.2 million 11.0 Project Y 1.2 million 10.5 Project Z 1.0 million 10.0       The company has a target capital structure that consists of 50 percent debt and 50 percent equity. Its after-tax cost of debt is 8 percent, its cost of equity is estimated to be 16.5 percent, and its net income is P2.5 million. If the company follows a residual dividend policy, what will be its plowback ratio?     Answers: a.  32%   b.  100%   c.  12%   d.  54%   e.  68%   f.  66%   g.  0

Project Size of Project Project IRR Project V P1.0 million 12.0% Project W 1.2 million 11.5 Project X 1.2 million 11.0 Project Y 1.2 million 10.5 Project Z 1.0 million 10.0       The company has a target capital structure that consists of 50 percent debt and 50 percent equity. Its after-tax cost of debt is 8 percent, its cost of equity is estimated to be 16.5 percent, and its net income is P2.5 million. If the company follows a residual dividend policy, what will be its plowback ratio?     Answers: a.  32%   b.  100%   c.  12%   d.  54%   e.  68%   f.  66%   g.  0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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GoldPure is considering the following independent, average-risk investment projects:
 
Project Size of Project Project IRR
Project V P1.0 million 12.0%
Project W 1.2 million 11.5
Project X 1.2 million 11.0
Project Y 1.2 million 10.5
Project Z 1.0 million 10.0
     

The company has a target capital structure that consists of 50 percent debt and 50 percent equity. Its after-tax cost of debt is 8 percent, its cost of equity is estimated to be 16.5 percent, and its net income is P2.5 million. If the company follows a residual dividend policy, what will be its plowback ratio?
   
Answers:
a. 
32%
 
b. 
100%
 
c. 
12%
 
d. 
54%
 
e. 
68%
 
f. 
66%
 
g. 
0
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