Estimate the return on capital

Assignment Help Financial Accounting
Reference no: EM13535154

Everlast Batteries Inc. has hired you as a consultant. The firm had after-tax operating earnings in 1998 of $180 million, net income of $100 million and it paid a dividend of $50 million. The book value of equity at the end of 1998 was $1.25 billion and the book value of debt was $350 million. The firm raised $50 million of new debt during 1998. The market value of equity at the end of 1998 was twice the book value of equity and the market value of debt was the same as the book value of debt. The firm has a cost of equity of 12% and an after-tax cost of debt of 5%.

a. Estimate the return on capital earned by Everlast Batteries

b. Estimate the cost of capital earned by Everlast Batteries

c. Estimate the economic value added by Everlast Batteries

Reference no: EM13535154

Questions Cloud

Compute what is the emf of the coil : A 1200-turn coil of wire that is 2.1 cm in diameter is in a magnetic field that drops from 0.14 T to 0 T in 12 ms. What is the emf of the coil
Evaluate the time for it to come to rest : A flywheel turns through 22 rev as it slows from an angular speed of 2.3 rad/s to a stop. Assuming a constant angular acceleration, find the time for it to come to rest
Explain the tempatuer in degrees celsius : A gas has a volume of 5.60 at 0. What is the tempatuer in degrees celsius if the volume is 200mL
Find the total electric flux through the tetrahedron : A charge q= +5.62 micro Coulons is located at the center of a regular tetrahedron ( a four- sided surface), Find the total electric flux through the tetrahedron
Estimate the return on capital : Estimate the return on capital earned by Everlast Batteries and estimate the cost of capital earned by Everlast Batteries
Given potential for demographic fault lines in negotiation : Given the potential for demographic fault lines in negotiating these changes, what would you advise as a strategy for managing diversity issues for program leaders?
Evaluate the angular momentum of the system : A particle of mass 0.350 kg is attached to the 100-cm mark of a meterstick of mass 0.125 kg. Calculate the angular momentum of the system when the stick is pivoted about an axis perpendicular to the table through the 50.0-cm mark
Explain a solution is percent by volume rubbing alcohol : A solution is known to be 23 percent by volume rubbing alcohol (isporpanol). How many mililiters of isopropanol would be in 250 mL of solution. 25 percent
Evaluate what is the speed of the block : A block with mass 2.0 kg is on a horizontal frictionless surface and is placed against a compressed spring that has force constant 128 N/m. what is the speed of the block after it has left the spring

Reviews

Write a Review

Financial Accounting Questions & Answers

  Question bodytone company sells lifetime health club

question bodytone company sells lifetime health club memberships. for one up-front nonrefundable fee a customer becomes

  The founder of alchemy products inc discovered a way to

the founder of alchemy products inc discovered a way to turn lead onto gold and patented this new technology. he then

  Classify the various phases of the mouse poison project

Eradication Laboratories Ltd is undertaking a number of research and development projects, one of which is described below.

  Evaluate the debt service fund of a governmental entity

With regard to the resources dedicated to the acquisition of fixed assets that will be used in general government activities, which of the following is true?

  Raphael corporations common stock is presently selling on a

raphael corporations common stock is presently selling on a stock exchange at 85 per share at its current balance sheet

  What is tfp level for economy relative to level associated

The SOE employs three quarters of the work force (Ns=3/4) (i) What is the efficient allocation of labor in this economy? (ii) What is the TFP level for the economy relative to the level associated with the efficient allocation?

  Compute the depreciation expense and rent revenue

Compute the depreciation expense, rent revenue, interest expense, insurance expense and supplies expense recognized during the first quarter

  Question on 31st august 2010 chickasaw industries issued

question on 31st august 2010 chickasaw industries issued 25million of its 30-year 6 percent convertible bonds dated

  Part-1you have been hired as an executive director of a

part-1you have been hired as an executive director of a small nonprofit organization. among your many duties are to

  Illustrate how much should be accounted for through debt

Department public golf course to be paid from pledged fees collected from golf course users. Illustrate how much should be accounted for through debt service funds for payments of principal over the life of the bonds

  Information determine the total stockholders equity

this information determine the total stockholders equity reported in the companys balance sheet dated december 31,2007

  Evaluate the internal rate of return

Evaluate the net present value at a 14% required rate of return and evaluate the internal rate of return and  the payback period of the investment.

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