Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Niglow Corporation produces metal castings. In the past year it earned a 10% return on its assets base of $10M. Niglow needs $10M to expand its operations, and has the option of obtaining none, some, or all of the proceeds from the bank. Currently the company is all equity financed. It expects to be able to maintain its return on assets after the expansion. The bank has indicated that the amount it will charge on the loan will be dependent upon the resultant debt/equity ratio. Specifically, the rates will be 9%, 10%, and 12% for debt to equity ratios less than or equal to 0.5, 1.0, and over 1.0, respectively. Niglow's tax rate is 40%.
Calculate Niglow's return on equity if the expansion is financed:
1. Using all equity
2. All debt
SolarTech Inc. is expected to pay a $2.50 dividend at year end, the dividend grows at a constant rate of 5.50% a year, and the common stock currently sells for $67.50 a share. The before-tax cost of debt is 7.50%, and the tax rate is 40%. The company..
Operating income (EBIT) $600 million, Interest expense $0, Tax rate 35%, Debt $0, Cost of equity 7%, WACC 7% . The company has no growth opportunities (g = 0), so the company pays out all of its earnings as dividends.
Icarus Airlines is proposing to go public, and you have been given the task of estimating the value of its equity. Management plans to maintain debt at 39% of the company’s present value, and you believe that at this capital structure the company’s d..
calculate the variance of returns of securities A, B and C.- What about portfolios composed only of type B and type C stocks?
An insured municipal bond bears a lower cost to the borrower than does an equivalent uninsured bond because:
In March 2014, farmer Will Armstrong projects to harvest 100 tons of orange in May 2014. In March, May orange futures are selling at $1329 per ton. Will wants to lock in this price so he has purchased futures contracts at $1329 per ton. The total cos..
Based on the pecking-order theory of capital structure, what are the assumptions for Miller and Modigliani that have been relaxed?
The market value of Charter Cruise Company's equity is $15 million and the market value of its debt is $5 million. If the required rate of return on the equity is 20% and that on its debt is 8%, calculate the company's cost of capital. (Assume no tax..
Pettit Printing Company has a total market value of $100 million, consisting of 1 million shares selling for $50 per share and $50 million of 10% perpetual bonds now selling at par. The company's EBIT is $11.06 million, and its tax rate is 25%. What ..
You are considering the acquisition of a $1.8m apartment building that you anticipate will produce $167,000 per year in net operating income (NOI) that you will sell after 5 years for $2m. What is the unlevered IRR of the investment? What is levered ..
You have just received notification that you have won the $1 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you’re around to collect), 80 years from now. What is the present value of..
Imagine the health organizations, such as doctors, hospitals, etc. Insurance claims are processed in abundance. It takes approximately 30-60 days for payment to be received. Afterwards, there might be an error in processing or coverage, which would h..
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd