Provide correct answer You are thinking of investing in Tikki'sTorches, Inc. You have only the followinginformation on the firm at year-end 2008:Net income $520,000Total debt $12.2 millionDebt ratio 42%What is Tikki's ROE for 2008?a. 1.79%b. 10.14%c. 3.09%d. 4.26%

To calculate ROE (Return on Equity), we need to find the total equity.Debt ratio = Total debt /…

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Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 10EP

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Assume that Firm A is an all-equity firm with total assets of $1,000 and the following distribution of EBIT for the coming year: Probability EBIT Interest EBT Taxes (40%) Net Income BEP ROA ROE 1.99% 2.79% 3.49% Firm A (Unlevered) 2.32% 2.83% Bad 30% $120 SO $120 $48 $72 12.0% 7.2% Economy Average Now assume As you can calculate, the standard deviation of the ROE distribution is 1.39 percen that the firm plans to issue $300 of debt, at an interest rate of 10 percent, and use the proceeds to repurchase equity (you may ignore potential impacts on price and assume that the firm will then have $700 of equity). Determine the standard deviation of the new ROE distribution if the firm does issue this debt. 40% $150 $0 $150 -$60 $90 Good 30% $180 SO $180 -$72 $108 15.0% 18.0% 9.0% 10.8% 9.0% 10.8%
Assume that Firm A is an all-equity firm with total assets of $5,000 and the following distribution of EBIT for the coming year: Fem A Unlevered Probability EBIT Interest EBT Taxes (40%) Net Income BEP ROA ROE O2.653% O 3.487% 2.800% O 3.098% Bad 3.774% 10.00% $500.00 $0.00 $500.00 -$200.00 $300.00 10.00% 6.00% 6.00% Economy Average 40.00% $700.00 $0.00 $700.00 -$280.00 $420.00 14.00% 8.40% 8.40% Now assume that the firm plans to issue $2,000 of debt, at an interest rate of 6.4 percent, and use the proceeds to repurchase equity (you may ignore potential impacts on price and assume that the firm will then have $3.000 of equity). Given this information, determine the standard deviation of the new ROE distribution. Good 50.00% $900.00 $0.00 $900.00 -$360.00 $540.00 18.00% 10.80% 10.80%
FINANCE PLEASE ANSWER C & D
Destin Company Information: Total Assets $940,000 Total Liabilities $600,000 Cost of debt 5.8% Risk-free rate 1.97% Beta 0.89 Market Return 10% A) Using CAPM, what is cost of equity? (so you are not confused, the opportunity cost of using equity is the return we were expecting to receive on the equity). a)8.03% b)7.77% c) 9.12% d) 8.9% B) What is Destin's Weighted Average Cost of Capital? a) 6.22% b) 5.89% c) 6.07% d) 5.72%
Based on the data given below, calculate the return on invested capital (ROIC). Net income = $300 NOPAT = $400 Short-term investments = $200 Stockholders' equity = $1,800 Total operating capital = $2,300 Group of answer choices 17.39% 14.91% 15.70% 16.67%
You were recently hired by MSS company to estimate its cost of capital. You obtained the following data: D1 = $1.75; P0 = $95.00; g = 6.00% (constant); and F = 7.00%. What is the cost of equity raised by selling new common stock? 7.08% 7.98% 8.18% 8.29% 7.57%
Solve this problem
Please solve only last five parts
Please calculate investment in net working capital, net cash flows, and present value of net cash flows! Thank you!
You were recently hired by Scheuer Media Inc. to estimate its cost of capital. You obtained the following data: D1 = $0.75; P0 = $42.50; g = 7.50% (constant); and F = 5.00%. What is the cost of equity raised by selling new common stock? a. 8.89% b. 9.18% c. 9.36% d. 9.50% e. 9.26%

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You are thinking of investing in Tikki's Torches, Inc. You have only the following information on the firm at year-end 2008: Net income $520,000 Total debt $12.2 million Debt ratio 42% What is Tikki's ROE for 2008? a. 1.79% b. 10.14% c. 3.09% d. 4.26%