Target capital structure that consists debt and equity

Assignment Help Financial Management
Reference no: EM13917640

Axel Telecommunications has a target capital structure that consists of 30% debt and 70% equity. The company anticipates that its capital budget for the upcoming year will be $2,000,000. If Axel reports net income of $3,000,000 and it follows a residual dividend payout policy, what will be its dividend payout ratio? Round your answer to two decimal places.

Reference no: EM13917640

Questions Cloud

Ethics codes apply to project selection-capital budgeting : Financial executives insist that there should be no separation between an individual's personal ethics and his or her business ethics. How do ethics codes apply to project selection and capital budgeting? What are the potential risks to a company of ..
A nursing home projects asset growth : A nursing home projects asset growth at 10 percent per year over the next 10 years. If it wishes to reduce its reliance on debt financing, what rate of equity growth over the 10-year period will be desired?
Find the weight that yields the minimum variance portfolio : Consider a portfolio choice problem in a world with risk free rate rf and two risky assets i = 1; 2. Assume that one asset has both a higher expected return and volatility than the other, so that 1 > 2 and 1 > 2, and that the returns to each are unco..
Determine the difference between two prices : You are to price options on a futures contract. A binomial tree models the movements of the futures price. You are given the following information: -Each period is 6 months, h=6months, -Time to maturity of an option, Determine the difference between ..
Target capital structure that consists debt and equity : Axel Telecommunications has a target capital structure that consists of 30% debt and 70% equity. The company anticipates that its capital budget for the upcoming year will be $2,000,000. If Axel reports net income of $3,000,000 and it follows a resid..
What is the difference in value of the bond : Shelly Inc. bonds have a coupon rate of 10%. The bonds mature in 10 years. Their par value is $1,000 if your required rate of return is 12%. What is the difference in value of the bond if its coupon is paid semiannually compared to annually?
Four investments has the highest PV : Which of the following four investments has the highest PV? (Assume your required rate of return is 5% annually)
How small business can recruit qualified employees : How small Business can recruit qualified Employees? Suggest any 3 Methods. Prepare an essay on Motivation Theories. Explain any 6 theories.
What is the forecasted return of this bond portfolio : Sioux Financial Corp. has forecasted its bond portfolio value for one year ahead to be $105 million. In one year, it expects to receive $10,000,000 in coupon payments. The bond portfolio today is worth $101 million. What is the forecasted return of t..

Reviews

Write a Review

Financial Management Questions & Answers

  How much would it be willing to lend the business owner

A small business owner visits his bank to ask for a loan. The owner states that he can repay a loan at $1,500 per month for the next three years and then $500 per month for two years after that. If the bank is charging customers 8.5 percent APR, how ..

  Offered an investment plan

You have $18,750 you want to invest for the next 30 years. You are offered an investment plan that will pay you 9 percent per year for the next 15 years and 13 percent per year for the last 15 years. How much will you have at the end of the 30 years?..

  Firms common size income statement

If a firm’s common size income statement shows that the earnings after tax percentage is too low, the firm may have spent too much money:

  Annual dividend on its common stock

Southern Markets recently paid a $2.80 annual dividend on its common stock. This dividend increases at an average rate of 3.8 percent per year. The stock is currently selling for $26.91 a share. What is the market rate of return?

  What is the value of a ten percent annual coupon

What is the value of a 10 percent annual coupon, $1,000 par value bond with 20 years to maturity if the required rate of return on the bond is 12 percent?

  Evaluate the required monthly mortgage payment

Evaluate the required monthly mortgage payment for Mr. Davidson and construct the 2014~2018 amortization table for Mr. Davidson.

  According to the constant dividend growth model

A share of stock will pay a dividend of $1.1 one year from now, with dividend growth of 4.4 percent thereafter. According to the constant dividend growth model, if the required return is 14.7 percent, what should the value of the stock be 2 years fro..

  What is its self-supporting growth rate

Maggie's Muffins, Inc., generated $2,000,000 in sales during 2015, and its year-end total assets were $1,300,000. Also, at year-end 2015, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and ..

  Most controversial topics in employment law

Affirmative action is one of the most controversial topics in employment law. How affirmative action is often presented in the media? How similar is that portrait to the one presented in Johnson v. Transportation Agency, Santa Clara County? When are ..

  Capital budgeting criteria-ethical considerations

An electric utility is considering a new power plant in northern Arizona. Power from the plant would be sold in the Phoenix area, where it is badly needed. Because the firm has received a permit, the plant would be legal; but it would cause some air ..

  Addition to retained earnings

California Retailing Inc. has sales of $4,000,000; the firm's cost of goods sold is $2,500,000; and its total operating expenses are $600,000. The firm's interest expense is $250,000, and the corporate tax rate is 40%. The firm paid dividends to pref..

  Describe the anti-takeover strategy employed

Describe the anti-takeover strategy employed by Genzyme during the Sanofi acquisition. Discuss why each may have been employed. In your opinion, did the Genzyme strategy work?

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