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A co.'s present capital structure contain 10, 00,000 equity shares and 60,000 preference shares. Thefirm's current EBIT is Rs. 6.4 million. Preference shares carry a dividend of Rs. 8 per share. The tax rateof the co. is 50%. The EPS is Rs. 2.72. The firm is planning to raise Rs. 10 million of external financing.
Two financing alternatives are being considered.
(i) Issuing 10, 00,000 equity shares of Rs. 10 each.
(ii) Issuing debenture for Rs. 10 million carrying 14% interest.
a. Suggest the co. the alternative that maximizes the EPS of the firm.
b. Compute the EPS-EBIT indifference point.
Brookman Inc's latest EPS was $2.75, its book value per share was $22.75-How much debt was outstanding?
payable at the end of each month for 3 years. What nominal annual interest rate is built into the monthly payment plan?
Two securities, Security A and Security B, with standard deviation of 30% and 40 percent, respectively. Compute the standard deviation of a portfolio weighted equally between two securitites if their correlation is;
A Company has contracted to provide lease financing for a machine to automate an assembly line. Yearly lease payments will start at the beginning of each year.
One year ahead of the planned IPO the company is already raising capital through private placement markets. What you can infer from the company success in the private market about the success of the IPO?
Walters Manufacturing Corporation has been approached by a commercial paper dealer offering to sell an issue of commercial paper for the company. The dealer indicates that Walters could sell a $5 million issue maturing in 182 days at an interest rate..
Computation of current value of shares of a stock under given dividend growth rate and are expected to continue growing at this rate for the foreseeable future
answer the following question:1. What is the Rule of 72 ?2. Solve using the Rule of 72: rate = 8%, years = 18, pv = $7,000. Solve for fv.
At the end of 1922, your great grandfather (g.g.f.) established a trust fund to be used in order to help a later generation of the family obtain a university education. Draw appropriate time-line(s) to demonstrate your calculations.
The following products are taken from the financial statements of Tracy Corporation for 2010:
What is the net present value of the following cash flows? Assume an interest rate of 3.59%
Use finance theory to explain and critique the key points that the authors are trying to communicate.
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