TCA Cable has fixed operating costs of $2.6 million, and its variable cost ratio is 0.30. TCA has $4.0 million in bonds outstanding with a coupon interest rate of 12%. TCA has 1.0 million common shares and 1,000,000 shares of $1.75 preferred stock outstanding. Total revenues for TCA Cable are $14.2 million. If TCA has a marginal tax rate of 40%, what is its degree of combined leverage?
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TCA Cable has fixed operating costs of $2.6 million, and its variable cost ratio is 0.30. TCA has $4.0 million
in bonds outstanding with a coupon interest rate of 12%. TCA has 1.0 million common shares and 1,000,000 shares of $1.75
Total revenues for TCA Cable are $14.2 million. If TCA has a marginal tax rate of 40%, what is its degree of combined leverage?
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- McGee Corporation has fixed operating costs of $5 million and a variable cost ratio of 0.60. The firm has a $17 million, 10 percent bank loan and a $4 million, 12 percent bond issue outstanding. The firm has 0.7 million shares of $5 (dividend) preferred stock and 1.8 million shares of common stock ($1 par). McGee’s marginal tax rate is 40 percent. Sales are expected to be $80 million. Compute McGee’s degree of operating leverage at an $80 million sales level. Round your answer to two decimal places. Compute McGee’s degree of financial leverage at an $80 million sales level. Round your answer to two decimal places. If sales decline to $76 million, forecast McGee’s earnings per share. Round your answer to the nearest cent.$DUMBA Inc. has fixed operating costs of $2.6 million and its variable cost ratio is .30. It has $4 million in bonds outstanding with a coupon rate of 12%. It has 1 million shares of $1.75 preferred stock and 1 million shares of common stock outstanding. DUMBA has a 40% tax rate, and sales are $14.2 million. What is DUMBA's DCL?Suppose you are estimating the WACC for Columbus Inc. It has the following data from its balance sheet: total debt = $290 million; total equity=$60 million. It has 20 million shares outstanding, and its stock is trading at $32 per share. Your analysis shows that the company's current borrowing rate is 7%, and that the cost of equity is 13%. If the company marginal tax rate is 30%, what is its WACC?
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- Buggins Inc. is financed equally by debt and equity, each with a market value of $1 million. The cost ofdebt is 5%, and the cost of equity is 10%. The company now makes a further $250,000 issue of debt anduses the proceeds to repurchase equity. This causes the cost of debt to rise to 5.5% and the cost of equityto rise to 10.83%. Assume the firm pays no taxes.What is the percentage increase in earnings per share after the refinancing?Kiwi Airlines has fixed operating costs of sh.5.8 million, and its variable costs amount to 20 percent of sales revenue. The firm has sh.2 million in bonds outstanding with a coupon interest rate of 8 percent. Revenues for the firm are sh.8 million and the firm has a 21% corporate tax rate. b) What is the firm's degree of financial leverage? Select one: A. 1.45 B. 1.36 C. 10.67 D. None of the aboveConsider the following information for Federated Junkyards of America. Debt: $76,000,000 book value outstanding. The debt is trading at 91% of book value. The yield to maturity is 10%. Equity: 2,600,000 shares selling at $43 per share. Assume the expected rate of return on Federated’s stock is 19%. Taxes: Federated’s marginal tax rate is Tc = 0.21. Calculate the weighted-average cost of capital (WACC). (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)