The Light Steel Company has the following composition of debt and capital: Bond liability, 20% (sold at par) 250,000,000, Priority stock equity 10% 150,000,000, Equity common stock, par @ Rp3,000,- 500,000,000, Income tax is 25% of net profit. Calculate earnings per share if the company earns profit before interest and income tax of: 1. Rp100.000.000,- 2. Rp150.000.000,-
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- Brower Co. is considering the following alternative financing plans: Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that income before bond interest and income tax is 2,000,000.Jordan Manufacturing reports the following capital structure: Current liabilities P100,000 ; Long-term debt 400,000 ; Deferred income taxes 10,000 ; Preferred stock 80,000 ; Common stock 100,000 ; Premium on common stock 180,000 ; Retained earnings 170,000. What is the debt ratio? A. 0.48 B. 0.49 C. 0.93 D. 0.96Calculate the WACC using the following information: Debt-Equity ratio is 50%. Cost of debt is 8.00% Cost of equity is 10.00% Company pays tax at 35% a) 7.60% b) 8.40% c) 9.33% d) 9.00%
- The book value of Debt is $600M and the book value of Equity is $1,400M. The company's stock is currently trading at $4 per share and there are 1M shares outstanding. The tax rate is 30% What is the % of Debt in the Capital Structure? a. 20% b. 33.3% c. 87% d. 13%ABC Company’s cost of equity is 18%, its before-tax cost of debt is 8%, and its corporate tax rate is 40%. Given the following balance sheet, calculate the after-tax weighted-average cost of capital. Assets Liabilities Cash P 100 Accounts payable P 200 Accounts Receivable 400 Accrued taxes due 200 Inventories 200 Long-term debt 400 Plant & equipment 1,300 Equity 1,200 P2,000 P2,000 A. 14.7% C. 9.7% B. 10.3% D. 16.8%A company has debt, equity share and overdraft financing. The overdraft is used to finance the day-to-day activities of the company when necessary. The after-tax cost of debt is 12%, the cost of equity is 20% and the after-tax cost of the overdraft is 18%. The market value of debt is R1 000 000, the market value of equity is R2 000 000 and the market value of the overdraft is R500 000. Calculate the company’s weighted average cost of capital (rounded to two decimal places). a. 18.33% b. 17.33% c. 18.43% d. 19.33% e. 17.43%
- 9. The Patrick Company's cost of common equity (rs) is 16%, its before-tax cost of debt (ra) is 8%, and its marginal tax rate is 20%. The stock sells at $41 per share and bonds sell at $900 per bond. Assets Cash Account Receivable Inventories $100,000 $300,000 $400,000 Liabilities and Equity Long-term debt (par value-$1000) $2,000,000 Common stock (par value=$1) $200,000 Retained earnings $2,800,000 Plant and equipment, net $4,200,000 Total assets $ 5,000,000 Total liabilities and equity What is Patrick's WACC if it raises capital based on market value capital structure? a. 12.16% $5,000,000 b. 14.56% c. 14.27% d. 12.80% e. 13.88%The company's capital structure is as follows Debt Weight 25%. Preferred Stock Weight 25% Common equity Weight 50%. The cost of debt is 12%6, the cost of preferred stock is 15% and the cost of common equity is 0.244 Calculate the companys weighted average Cost of tapital. Select one: Oa ob920 Ob.0.1895 Oc01520 Od All the given choices are not correct Oe 0.1595Cost of equity and Pre-tax cost of debt of Company Z Is 15% 9.2 % respectively. Company pays tax at 40%. The target debt-equity ratio to maintain weight average cost of capital of 11.25% Is: 0.6545 1.8293 1.5280 0.5467
- Samuel Corp. provides the following information: EBIT = $386.50 Tax (TC ) = 21% Debt = $700 RU = 10% Question: What is the value of Samuel’s equity?Cost of equity and Pre-tax cost of debt of Company Z is 15% 9.2% respectively. Company pays tax at 40%. The target debt-equity ratio to maintain weight average cost of capital of 11.25% is: a) 1.8293 b) 0.5467 c) 1.5280 d) 0.6545You are given the financial information for the Unic Company: Earnings Before Interest and Tax (EBIT) = $126.58 Corporate tax rate (TC) = 0.21 Debt (D) = $500 Unlevered cost of capital (RU) = 0.20 The cost of debt capital is 10 percent. Question: Determine the value of Unic Company equity? Determine the cost of equity capital for Unic Company? Determine the WACC for Unic Company?