what will be its dividend payout ratio for the current year? Interpret your answer
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Lambda Limited has a target debt-equity ratio of 1:2. The company anticipates that its capital budget for the accounting year 2020-21 (upcoming year) will be Rs. 900 crores. If Lambda reports net income (profit after tax) of Rs. 1000 crores during the accounting year 2019-20 and it follows a residual dividend payout policy, what will be its dividend payout ratio for the current year? Interpret your answer
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- ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 9 years to maturity that is quoted at 107 percent of face value. The issue makes semiannual payments and has an embedded cost of 6.6 percent annually. What is the company's pretax cost of debt? If the tax rate is 24 percent, what is the aftertax cost of debt? Pretax cost of debt: __________% Aftertax cost of debt: __________%Percentages need to be entered in decimal format, for instance 3% would be entered as .03. Ezzell Enterprises has the following capital structure, which it considers to be optimal under present and forecasted conditions: Debt (long-term only) ratio - 45% Common equity - 55% Total liabilities and equity - 100% For the coming year, management expects after-tax earning of $2.5 million. Ezzell's past dividend policy of paying out 60% of earnings will continue. Present commitments from its bankers will allow Ezzell to borrow according to the following schedule: Loan Amount Interest Rate $1 to $500,000 9% on this increment of debt $500,001 to $900,000 11% on this increment of debt $900,001 and above 13% on this increment of debt The company's marginal tax rate is 40%, the current market price of its stock is $22 per share, its last dividend was $2.20 per share, and the expected growth rate is 5%. External equity (new common) can be sold at a flotation cost of 10%.…As the chief financial officer of Adirondack Designs, you have the following information: Next year's expected net income after tax but before new financing Sinking-fund payments due next year on the existing debt Interest due next year on the existing debt Common stock price, per share Common shares outstanding Company tax rate $ 37 million $12 million $7 million $26.5 17 million 45% a. Calculate Adirondack's times-interest-earned ratio for next year assuming the firm raises $47 million of new debt at an interest rate of 5 percent b. Calculate Adirondack's times-burden-covered ratio for next year assuming annual sinking-fund payments on the new debt will equal $3.0 million c. Calculate next year's earnings per share assuming Adirondack raises the $47 million of new debt d. Calculate next year's times-interest-earned ratio, times-burden-covered ratio, and earnings per share if Adirondack sells 1.2 million new shares at $22 a share instead of raising new debt. Note: Do not round…
- Gg.20.If the net profit of the firm is OMR 280000 and the capital employed is OMR 1400000, then the return on capital employed will be 20%. During inflation with net profit calculated with replacement cost is OMR 150000 and the capital employed is OMR 2000000. Then the return on capital employed will be: a) 14% b) 6.82% c) 7.5% d) 9%Other relevant information about the company follows: The 20-year Treasury Bond rate is currently 4.5 percent and you have estimated market-risk premium to be 6.75 percent using the returns on stocks and Treasury bonds from 2010 to 2019. Pharmos Incorporated has a marginal tax rate of 25 percent. Required: Answer the following questions given the information above Calculate to the following for Pharmos considering its tax rate of 25%:i. Total Market Value for the Firmii. After-tax cost of Loan NO EXCEL SPREADSHEETS SHOW FULL WORKINGS WITHOUT EXCEL
- altamonte telecommunications has a target capital structure that consist of 45% debt and 55% equity. the company anticipates that its capital budget for the upcoming year will be $1,000,000. if altamonte reports net income of $1,200,000 and it follows a residual dividend payout policy, what will be its dividend payout ratio?A firm in the IT sector is considering how to set its dividend policy. It has a capital budget of €3,000. The company wants to maintain a target capital structure that is 15% debt and 85% equity. The company forecasts that its net income this year will be €3,500. If the company follows a residual dividend policy, what will be its total dividend payment and its payout ratio? Dividends = Net income – [(target equity ratio) *(total capital budget)].A firm has the following accounts and financial data for 2020: Sales = 30000 Cost of goods sold = 3000 Accounts payable = 500 Accounts receivables = 100 Number of shares of Common stocks = 1000 Preferred stock dividends = 95 operating expenses = 700 Interest expense=200 Tax rate = 25% Current liability = 1000 PRICE IS 7 What is the firm's earnings available to common shareholders for 2020? WHAT IS THE P/E RATIO? WHAT IS THE EPS
- Company Y has a target debt ratio of 55%. Currently its debt ratio is 60% and it expects to revert to the target ratio in the near future. The company has a market cost of equity of 20%. While it has no bonds, it has interest payments of R1 000 000 on liabilities of R10 000 000. Assume the tax rate is 28%. What is the WACC for the company? Ⓒa. 6.36% b. 9.00% c. 12.33% d. 12.96%Click to see additional instructions In 2020, ABC corporation had sales revenue of $313,500, operating costs of $275,750, and year-end assets of $205,000. The debt-to-total-assets ratio was 25%, the interest rate on the debt was 7.5%, and the firm's tax rate was 35%. In 2021, the firm aims to use additional debt financing and increase the debt-to-total-assets ratio to 50%. Assuming that sales and total assets will not be affected, and that the interest and tax rate will both remain constant, by how much value will the ROE change in response to change in the capital structure? (Round to TWO decimals for only ROE and change in ROE, the last two rows; for the remaining values, roundup.) 2020 2021 Total Debt $4 2$ Interest Expense S Total Equity Net Income 06 Return on Equity Change in ROE