Given that Prestige Appliances Ltd. records sales of Rs. 5.20 crores, possesses total assets worth Rs. 2.10 crores, and has a total debt of Rs. 60 la h a profit margin of 15 percent, determine the Return on Assets (ROA) and Return on Equity (ROE) for the company. b) Reliance Petrochemic 15 percent coupon bonds on the market that have 7 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 12 p at is the current price of these bonds?
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- Using the DuPont method, evaluate the effects of the following relationships for the Butters Corporation. A.Butters Corporation has a profit margin of 5.5 percent and its return on assets (investment) is 8.75 percent. What is its assets turnover? Round your answer to 2 decimal places. ______ times B.If the Butters Corporation has a debt-to-total-assets ratio of 65.00 percent, what would the firm’s return on equity be? Note: Input your answer as a percent rounded to 2 decimal places. C.What would happen to return on equity if the debt-to-total-assets ratio decreased to 60.00 percent? Input your answer as a percent rounded to 2 decimal places.A broker has estimated the equity value of Kensington Homebuilders to be £4.0 billion by applying a P/E multiple of 10 times to forecast Earnings per Share (EPS) this year. The company has a corresponding Earnings before Interest and Tax (EBIT) of £500m and £1.0 billion of net debt. Which of the following figures would correspond to the Enterprise Value to EBIT (EV/EBIT) multiple implied by the £4.0 billion equity value? a 6.0x b None of these options are correct. c 8.0x d 10.0x e 12.0xTwill Consulting has total assets of $1,810. These assets are expected to increase in value to either $1,900 or $2,400 by next year. The company has a pure discount bond outstanding with a face value of $2,000. This bond matures in one year. Currently, U.S. Treasury bills are yielding 5.5 percent. What is the value of the equity in this firm? Multiple Choice $7.24 $6.98 $7.89 $6.67 $7.08
- Edwards Construction currently has debt outstanding with a market value of $75,000. The company has a WACC of 9 percent and has EBIT of $8,750 in the next year. The tax rate is 20%. What is the debt-to-value ratio if the EBIT’s growth rate is 5%? a. 42.86% b. 39.33% c. 96.42% d. 32.45%The cost of equity of a certain company is calculated based on CAPM (risk free rate 1.75%, market premium 6%, beta 1,1), the nominal cost of a long-term loan amounts to 6%,the nominal cost of capital raised from the issue of bonds amounts to 5.5%. Interest on the bonds is paid twice a year, the loan in contrast is repaid on quarterly basis. We also know that the market value of the share capital equals 1000, the nominal value of shares (appearing in the balance sheet as equity) amounts to 800, the nominal value of the long-term credit: 600, the nominal value of the issued bonds: 300. a. On the basis of the available data please, estimate the cost of equity. b. On the basis of the available data and the information that the tax rate amounts to 19%, please, estimate the value of WACC.Suppose that Backwoods Chemical's book balance sheet is: Backwoods Chemical Company (Book Values) Debit Net working capital Net fixed assets $ 400 1,600 Total assets $ 2,000 $ 1,000 1,000 $ 2,000 Credit Debt Equity (net worth) Total value The debt has a one-year maturity and a promised interest payment of 9%. Thus, the promised payment to Backwoods's creditors is $1,090. The market value of the assets is $1,200, and the standard deviation of asset value is 45% per year. The risk-free interest rate is 9%. Calculate the value of Backwoods's debt and equity. Note: Do not round intermediate calculations. Round your answers to the nearest whole number. Value of equity Value of debt
- The book value of SA Ornirat’s equity is 106,000 euros, with a ACB of 3. The company’s cash position is 84,000 euros and its financial and banking debt is 410,000 euros. What is its market value leverage based on net financial debt?A firm that strongly believes in their residual dividend policy had investment opportunitiesworth Rs. 100 Crores. Its earning in the current period was also Rs.100 crores. The target capitalstructure of the firm involved a debt equity ratio of 1:1.Following its policy, the firm decided to fund the investment opportunities with Rs.50 croresdebt and Rs. 50 lakhs from earnings. The remaining Rs.50 lakhs from earnings was distributed asdividend. Do you think that the firm was right in raising debt? What would be the implicationson the value of the firm if it had decided to fund the investment entirely with the earnings?Ivanhoe Network Associates has a current ratio of 1.60, where the current ratio is defined as follows: current ratio = current assets/current liabilities. The firm's current assets are equal to $1,236,000, its accounts payable are $422,000, and its notes payable are $350,000. Its inventory is currently at $ 724,000. The company plans to raise funds in the shot - term debt market and invest the entire amount in additional inventory. How much can notes payable increase without the current ratio falling below 1.50?
- 1. Dobson Dairies has a capital structure that consists of 60 percent long-term debt and 40 percent common stock. The company’s CFO has obtained the following information: The before-tax yield to maturity on the company’s bonds is 8 percent. The company’s common stock is expected to pay a P3.00 dividend at year end (D1 = P3.00), and the dividend is expected to grow at a constant rate of 7 percent a year. The common stock currently sells for P60 a share. Assume the firm will be able to use retained earnings to fund the equity portion of its capital budget. The company’s tax rate is 40 percent. What is the company’s weighted average cost of capital (WACC)? Group of answer choices 8.03% 9.34% 12.00% 7.68% 8.00% 2. Super Sounds is expecting a period of intense growth and has decided to retain more of their earnings to help finance that growth. As a result, they are going to reduce the annual dividend by 20 percent a year for the next three years. After that they will maintain…Binomial Tree Farm's financing includes $5 million of bank loans. Its common equity is shown in Binomial's Annual Report at $6.67 million. It has 500,000 shares of common stock outstanding, which trade on the Wichita Stock Exchange at $18 per share. What debt ratio should Binomial use to calculate its company cost of capital or asset beta? Note: Enter your answer as a percent rounded to 2 decimal places. Debt ratio %Edwards Construction currently has debt outstanding with a market value of $75,000. The company has a WACC of 10 percent. Tax rate is 20%. The company just released its EBIT of $8,750 for the preceding financial year (t = 0). What is the debt-to-value ratio if the company's growth rate is 7 percent? O 0.7 O 0.23 O 0.21 O 0.3