Q.2 The following is the capital Structure of Maruti Itd.Sources of capitalBook valueMarket valueRs.40,00,00010,00,00030,00,00020,00,000Rs.80,00,000Equity shares of Rs. 100 each9% Cumulative preference shares of Rs. 100 each11 % DebenturesRetained Earnings12,00,00033,00,000ТОTAL1,00,00,0001,25,00,000Additional Information:1. For the last year the company had paid equity dividend at 25% and its dividend is likelyto grow 5% every year.2. The current market price of the company's equity share is Rs. 200.3. Corporate tax rate is 30% and shareholders personal income tax rate is 20%You are required to calculate:a) Cost of capital for each source of capital.b) Weighted average cost of capital on the basis of book value weights.c) Weighted average cost of capital on the basis of market value weights.

Cost of each source of capital Equity Cost of Equity= Expected dividend per share/Market value per…

Answered: Q.2 The following is the capital…

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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Quiz Q1
Percent of capital structure: Preferred stock Common equity (retained earnings) Debt Additional information: Corporate tax rate Dividend, preferred Dividend, expected common Price, preferred Growth rate Bond yield Flotation cost, preferred Price, common 15% 45 40 35% Debt Preferred stock Common equity (retained earnings) Weighted average cost of capital $ 8.00 $ 3.50 $ 105.00 98 8% $ 10.40 $ 78.00 Calculate the weighted average cost of capital for Digital Processing Incorporated Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. Weighted Cost 5.20 % 8.33 11.50 25.03 %
YZ Goods target capital structure and other data follow: Long-term debt $ 754,000,000 Preferred stock 40,000,000 Common equity 896,000,000 Total capital $1,690,000,000 Cost of Debt (kd) = 11% for amounts up to 80 M of additional Debt; will rise to 13% after that. Cost of Preferred = 10.5% at any amount T = 40%. P0 = $23. g= 8%, and it is expected to remain constant. Assume that the company expects to have total earnings of $137.8 million in 2020. Further, it has a target payout ratio of 45 percent, so it plans to pay out 45 percent of its earnings as dividends. Flotation cost of 5% is incurred for issuance of new shares. The following projects are available for investment: Project Cost (in Millions) Rate of Return A $50…
أنت ۱۲ أبریل 8:۲۹ م Financial Plan |Components Debt |Equity Cost Weights Weighted Cost 7.15% 5.15% Weighted Average Cost of Capital 55% FIND Debt Equity 9.90% 60% 11.50% Weighted Average Cost of Capital FIND Debt 150000 Equity 450000 7.15% C 5.15% Weighted Average Cost of Capital 7.15% 5. 15% Weighted Average Cost of Capital FIND Debt 300000 Equity 300000 FIND Answer the following questions: FIND weighted Average Capital for Financial Plan C s.650% FIND weighted Average Capital for Financial Plan A 6.050% FIND weighted Average Capital for Financial Plan B 10.540% FIND weighted Average Capital for Financial Plan D 6,150% O O D
I need help solving FCFE and Cash Flow per Share. See below and advise. All in MM. Exploration Expense: -12.8 Asset Retirement Obligation Accretion: -6.0 Depreciation, Depletion and Amortization: -378.9 Working Capital (Increase) / Decrease: (30.0) Capital Expenditures: 156.1 Net Debt: -11.0 Number of Shares Outstanding: 251
Table 9.1 A firm has determined its optimal capital structure which is composed of the following sources and target market value proportions. Source of Capital Long-term debt Preferred stock Common stock equity Target Market Proportions OA. 8.13 percent OB. 4.67 percent OC. 8 percent O D. 3.25 percent 20% 10 70 Debt: The firm can sell a 12-year, $1,000 par value, 7 percent bond for $960. A flotation cost of 2 percent of the face value would be required in addition to the discount of $40. Preferred Stock: The firm has determined it can issue preferred stock at $75 per share par value. The stock will pay a $10 annual dividend. The cost of issuing and selling the stock is $3 per share. Common Stock: A firm's common stock is currently selling for $18 per share. The dividend expected to be paid at the end of the coming year is $1.74. Its dividend payments have been growing at a constant rate for the last four years. Four years ago, the dividend was $1.50. It is expected that to sell, a new…
Q47 The Engineering Company currently has 100,000 outstanding stocks selling at OMR 100 each. The firm is also thinking of declaring a dividend of OMR 5 per share at the end of the current fiscal year. The firms opportunity cost of capital is 10%. What will be price of the stock at the end of the year assume that dividend is declared under MM model? a. OMR 105 b. OMR 115 c. OMR 110 d. OMR 100
QUESTION 20 First National Bank Assets Liabilities and Owners' Equity Reserves $1,800 Deposits $16,000 Loans $9,000 Debt $1000 Short-term securities $7,000 Capital (owners' equity) $800 If the market value of Short-term securities fall to $6,800. Then the percentage change of the leverage ratio is: a. 31.83% b. 29.33% C. -29.33% d. -31.83% e. 200$ f.-200$ g. There is not enough information to find the answer a e f OOO O
Q14 An entity issued 1 500 debentures with face value of R20 000 each. The coupon rate on the debentures is 12% paid annually in arrears. In order to speed the sale of the debentures, the directors decided to issue them at 10% discount. What amount would be recorded by the entity in its statement of financial position under non-current liabilities? Select one: a. R20 000 b. R15 000 000 c. R30 000 000 d. R27 000 000
None
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