User Account

All Pages

Should ligaya management proceed with capital and why

Assignment Help Accounting Basics
Reference no: EM132807201

Question 1: LIGAYA, which has no current debt, has a beta of 0.95 for its ordinary shares. Management is considering a change in the capital structure to 30 percent debt and 70 percent equity. This change would increase the beta on the stock to 1.15, and the after-tax cost of debt will be 8.5 percent. The expected return on equity is 15 percent, and the risk free rate is 6 percent. Tax rate is 40%. Should LIGAYA's management proceed with the capital structure change? Why?

Reference no: EM132807201

Questions Cloud

What is the expected dividend for year : What is the expected dividend for year 10 if the required return is 18%?
Find what the cost of capital for retained earnings is : Find what the cost of capital for retained earnings is? The management of LIVE has been reviewing the company's financing arrangements.
Calculate kingbird current share price : The T-bill rate is 4.6 percent and the risk premium of Kingbird Ltd. is 8.1 percent. Calculate Kingbird's current share price.
Legal Liability and the Gig Economy : Uber is largely hailed as the advent of the gig economy, Identify the steps Uber can take, if any, to limit its legal exposure due to the conduct of its driver
Should ligaya management proceed with capital and why : Management is considering a change in the capital structure to 30 percent debt. Should LIGAYA's management proceed with the capital structure change? Why?
What is the multi-stage ddm applied price : What is the multi-stage DDM applied price of a stock that is expected to begin paying a $3 dividend 6 years from now.
What is ewert expected price 4 years from today : The required rate of return on the stock, rs, is 15.00%. What is Ewert's expected price 4 years from today?
Discuss the effect of the choices on revenue recognition : Discuss the effect of the choices on revenue recognition and matching principles. Compare and contrast the following items, pointing out their key elements.
What is the expected change in the eps : Preference share dividends of P2,000 per year, and a 30 percent tax rate. What is the expected change in the EPS if sales will increase by 15%?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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