Change in the capital structure

Assignment Help Finance Basics
Reference no: EM131201904

Last year Hamdi Corp. had sales of $500,000, operating costs of $450,000, and year-end assets of $350,000. The debt-to-total-assets ratio was 17%, the interest rate on the debt was 7.5%, and the firm's tax rate was 35%. The new CFO wants to see how the ROE would have been affected if the firm had used a 50% debt ratio. Assume that sales, operating costs, total assets, and the tax rate would not be affected, but the interest rate would rise to 8.0%. By how much would the ROE change in response to the change in the capital structure?

  • 3.79%
  • 3.69%
  • 3.18%
  • 3.53%
  • 2.48%

Reference no: EM131201904

Calculate the cost of a collar

(a) What is the forward price of gold with delivery in 3 months? (b) Calculate the cost of a collar, with 3 months to delivery, where the strike of all options used is 1620.1

Explain the concept of cost of capital

Explain the concept of cost of capital. How may cost of capital affect long-term financial decisions? Would a company prefer to have a high or low cost of capital? Why? What

Integration of financial markets

Globalization has failed in every respect. Brexit is a clear sign that the integration of financial markets will now be unwound. What is your view of this statement? Justify

Assignment-budget planning and control

Babycakes, a specialty bakery, is the company that will be considered for all parts of your budget planning and control report. For this assignment, you will develop a three

What is the reason behind this

Geotechnical Instrumentation is frequently employed for monitoring the condition of reclamation. Sometimes two piezometers are installed inside the same borehole.

Return net cash inflows

What is the incremental cash flow for a company that foregoes $6,000 pa in rental for factory space in order to mamnufacture a product that will return net cash inflows os $

Minimum amount of wealth

How much would $1 invested daily, perfectly, in Apple stock, for the past year, have made? what you calculated to be the guaranteed minimum amount of wealth at the end, assu

Methods by quality of information for decision making

Compare the results of the three (3) methods by quality of information for decision making. Using what you have learned about the three (3) methods, identify the best projec

Reviews

Write a Review

 
Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd