What is the true option? General accounting question Westbrook Manufacturing is financed 60 percent by equity and 40 percent by debt.If the firm expects to earn $45 million in net income next year and plans to retain35% of it, how large can the capital budget be before common stock must be sold?a. $15.75 millionb. $19.5 millionc. $26.25 milliond. $30.8 million

Step 1: Define Capital Budget Before Selling Common StockThe capital budget refers to the maximum…

Answered: Westbrook Manufacturing is financed 60…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 11P

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Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%? What are the projected sales in Years 1 and 2? What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2? What is the projected FCF for Year 2?
Clanton Company is financed 75 percent by equity... Please provide answer the accounting question
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%
Clanton Company is financed 40 percent by common equity and 60 percent by debt. If the firm expects to earn $20 million in net income next year and retain 40% of it, how large can the capital budget be before new common stock must be sold? a) $8.0 million b) $12.0 million c) $20.0 million d) $50.0 million
Suppose Firm A plans to retain $100 million of earnings for the year. It wants tofinance its capital budget using a target capital structure of 46% debt, 3% preferred,and 51% common equity. How large could its capital budget be before it must issuenew common stock?
Assume that B Corp. net income for next year would be 500 million and its optimal capital budget for next year is 250 million. Also assume that the debt ratio is now 80%. What would be the maximum capital spending if B Corp decides to retain all of its earnings? A) $250 m B) $2,500m C) $4,500 m D) $450 E) $5.500 m OA OB OC OD OE
Avant-Marlowe Technologies has a target capital structure that consists of 40% debt and 60% equity. The company anticipates that its capital budget for the upcoming year will be $30 million. If the firm reports net income of $20 million, and it follows a residual dividend policy, what will be its dividend payout ratio? Select one: a..67 b. .10 c. .42 d. .80 e..40
The projected capital budget of Kandell Corporation is $575,000, its target capital structure is 60% debt and 40% equity, and its forecasted net income is $575,000. If the company follows a residual dividend policy, what total dividends, if any, will it pay out? Select the correct answer. a. $344,887 b. $345,000 c. $344,831 d. $344,944 e. $344,774
Answer? ? Financial accounting question
Broske industries... Financial accounting
blue Industries has an EBIT of $12 million per year forecast in perpetuity. blue’s cost of equity is 15% and its tax rate is 28%. If Blue Industries borrows $30 million, what will be the value of the firm? Group of answer choices $76.4 million $66.0 million $80.0 million $57.6 million $30.8 million
1. Quantitative Problem: Barton Industries expects that its target capital structure for raising funds in the future for its capital budget will consist of 40% debt, 5% preferred stock, and 55% common equity. Note that the firm's marginal tax rate is 25%. Assume that the firm's cost of debt, rd, is 9.2%, the firm's cost of preferred stock, rp, is 8.4% and the firm's cost of equity is 11.8% for old equity, rs, and 12.2% for new equity, re. What is the firm's weighted average cost of capital (WACC1) if it uses retained earnings as its source of common equity? Do not round intermediate calculations. Round your answer to two decimal places. 2. What is the firm’s weighted average cost of capital (WACC2) if it has to issue new common stock? Do not round intermediate calculations. Round your answer to two decimal places

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