Reference no: EM131180720
Cybernauts, Ltd., is a new firm that wishes to determine an appropriate capital structure. It can issue 16 percent debt or 15 percent preferred stock.
The total capitalization of the company will be $5 million, and common stock can be sold at $20 per share.
The company is expected to have a 50 percent tax rate (federal plus state).
Four possible capital structures being considered are as follows:
PLAN DEBT PREFERRED EQUITY
1 0% 0% 100%
2 30 0 70
3 50 0 50
4 50 20 30
a. Construct an EBIT-EPS chart for the four plans. (EBIT is expected to be $1 million.) Be sure to identify the relevant indifference points and determine the horizontal-axis intercepts.
b. Using Eq. (16.12), verify the indifference point on your graph between plans 1 and 3 and between plans 3 and 4.
c. Compute the degree of financial leverage (DFL) for each alternative at an expected EBIT level of $1 million.
d. Which plan is best? Why?
Percentage of legal coins are rejected by the machine
: Use the info to answer-suppose a vending machine is designed to reject all coins with weights more than 2 standard deviations above or below the mean weight(grams) est standard deviation in gram
|
Possible values of the random variable
: Consider a sample of eight families who are asked if their children influence their vacation plans. Identify the values of n, p and q, and list the possible values of the random variable x.
|
What is represented by the overflow of the tub
: Which of the following calculations is used in solving Thomas's flashover correlation to determine the HHR need for flashover to occur?
|
Purchasing and materials management
: To a great extent, purchasing and materials management is becoming a strategic business function. Explain why this is true.
|
Construct an ebit eps chart for the four plans
: Construct an EBIT-EPS chart for the four plans.- Compute the degree of financial leverage (DFL) for each alternative at an expected EBIT level of $1 million.
|
Research a topic which interests you
: Identify a problem with the actions of a person, company or government that negatively impacts on a target group of people, economy, ecosystem or society
|
What is the value of the standardized test statistic
: 1) Use technology and a t-test to test the claim about the population mean mu(u) at the given level of significance alpha using the given sample statistics. Assume the population is normally distributed.Claim: mu(u)>76; alpha=0.05, Sample statisti..
|
What is the ex dividend date
: What is the ex-dividend date? - Ignoring personal taxes, how much should the stock price drop on the ex-dividend date?
|
Importance of the chosen topic in the context of ea
: This assignment will require a group of 4-6 students to work as an EA consulting Start-up Company. Each group needs to select one topic, conduct research on it and write report based on their findings. Introduction - brief overview of the topic, wh..
|