Steph & Sons has a capital structure that consists of 20 percent equity and 80 percent debt. The company expects to report $3 million in net income this year, and 60 percent of the net income will be paid out as dividends. What is the debt structure of the capital budget?
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Steph & Sons has a capital structure that consists of 20 percent equity and 80 percent debt. The company expects to report $3 million in net income this year, and 60 percent of the net income will be paid out as dividends. What is the debt structure of the capital budget?
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- Tong Foong Co. Ltd. has decided that its capital budget during the coming year will be $20 million. Its optimal capital structure is 60 percent equity and 40 percent debt. Its earnings before interest and taxes (EBIT) are projected to be $34.667 million for the year. The company has $200 million of assets; its average interest rate on outstanding debt is 10 percent; and its tax rate is 40 percent. Required: How much debt is outstanding (in dollars) and what is the cost of the debt (in dollars) for the period? Compute the Earnings After Tax (Net Income)? How much equity is required for the coming year capital budget? If the company follows the residual dividend policy and maintains the same capital structure, what will its dividend payout (in $) and the dividend payout ratio (in %)?Tong Foong Co. Ltd. has decided that its capital budget during the coming year will be $20 million. Its optimal capital structure is 60 percent equity and 40 percent debt. Its earnings before interest and taxes (EBIT) are projected to be $34.667 million for the year. The company has $200 million of assets; its average interest rate on outstanding debt is 10 percent; and its tax rate is 40 percent. (i). How much debt is outstanding (in dollars) and what is the cost of the debt (in dollars) for the period? (ii). Compute the Earnings After Tax (Net Income)? (iii). How much equity is required for the coming year capital budget? (iv). If the company follows the residual dividend policy and maintains the same capital structure, what will its dividend payout (in $) and the dividend payout ratio (in %)?Company JA Prestwood had a net income of $1,000,000 this year. Next year's total capital budget is $2,600,000. If the target capital structure is 47% debt and the rest equity, what will be this year's dividend payout ratio?
- Mortal Inc. expects to have a capital budget of $575,000 next year. The company wants to maintain a target capital structure with 35% debt and 65% equity, and its forecasted net income is $500,000. If the company follows the residual dividend model, how much in dividends, if any, will it pay? a. $111,100 b. $126,250 c. $132,563 d. $118,675 e. $113,625 Portland Plastics Inc. has the following data. If it follows the residual dividend model, what is its forecasted dividend payout ratio? Capital budget $13,500 % Debt 40% Net income (NI) $13,650 a. 42.29% b. 44.73% c. 49.20% d. 40.66% e. 32.53%Strategic Systems, Inc., expects net income of $800,000 for next year. Its target capital structure is 40 percent debt and 60 percent common equity. The Director of Capital Budgeting has determined that the optimal capital budget for next year is $1.2 million. If Strategic uses the residual dividend policy to determine next year’s dividend payout, what is the expected payout ratio? 0% 10% 67% 80% 90%The projected capital budget of Kandell Corporation is $725,000, its target capital structure is 60% debt and 40% equity, and its forecasted net income is $725,000. If the company follows a residual dividend policy, what total dividends, if any, will it pay out?
- Tong foong Co. Ltd has decided that its capital budget during the coming year will be $20 million ($20,000,000) , the optimal capital structure is 60% equity and 40% debt , its earnings before interest and taxes (EBIT) are projected to be $34,667 million for the year . the company has $200,000,000 of assets, its average interest rate on outstanding debts is 10% and its tax rate is 40%. d. if the company follows the residual dividend policy and maintains the same capital structure, what will its dividend payout (in $) and the dividend payout ratio ( in%) ?Tong Foong Co. Ltd. has decided that its capital budget during the coming year will be $20 million. Its optimal capital structure is 60 percent equity and 40 percent debt. Its earnings before interest and taxes (EBIT) are projected to be $34.667 million for the year. The company has $200 million of assets; its average interest rate on outstanding debt is 10 percent; and its tax rate is 40 percent. Required: If the company follows the residual dividend policy and maintains the same capital structure, what will its dividend payout (in $) and the dividend payout ratio (in %)?The CEO of Harlem Hardware Supplies has submitted together a capital budget of $48,500,000 for the following year’s investment opportunities. He expects to have $19,000,000 in retained earnings at the end of the year. Harlem’s target capital structure calls for 45 percent equity. Based on these figures, will Harlem be able to meet their capital budget needs with retained earnings? Use these data to calculate Harlem's retained earnings break point (REBP). Calculate the figure to the nearest dollar
- Brock Brothers wants to maintain its capital structure which is 30 percent debt and 70 percent equity. The company forecasts that its net income this year will be $1,000,000. The company follows a residual distribution policy and anticipates a dividend payout ratio of 40 percent. What is the size of the company’s capital budget? a) $600,000 b) $857,143 c) $1,000,000 d) $1,428,571 e) $2,000,000XYZ Corp has a capital budget of $10M for next year. The company has a target capital structure of 65% Equity / 35% Debt. If net income next year is projected to be $9M and the company follows a residual distribution model and pays all distributions as dividends, what will be its payout ratio?A COMPANY WILL BE FINANCING ITS OPERATIONS WITH AND A CAPITAL BUDGET IS 40,000,000 AND DEBT-TO-EQUITY RATIO OF 1. THE INTEREST RATE ON COMPANY'S DEBT IS 10%. THE EXPECTED RETURN ON EQUITY BY THE SHAREHOLDERS IS 16.66% WHILE THE BUDGETED NET INCOME BY MANAGEMENT IS 6,000,000. ASSUMING THAT THE COMPANY'S TAX RATE IS 40%, COMPUTE THE WEIGHTED AVERGE COST OF CAPITAL