User Account

All Pages

Should ligaya management proceed with the capital structure

Assignment Help Accounting Basics
Reference no: EM132783650

Problem 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 7.5 percent. The expected return on equity is 15 percent, and the risk free rate is 6 percent. Tax rate is 30%. Should LIGAYA's management proceed with the capital structure change? Why?

Reference no: EM132783650

Questions Cloud

Describe the four elements of the lean philosophy : 1. Brifely describe the four elements of the lean philosophy taking an appropriate examples
What the cost of capital for retained earnings is : What the cost of capital for retained earnings is? The management of LIVE has been reviewing the company's financing arrangements.
What is the utilization rate of the booth workers : During busy times, 60 potential customers per hour arrive at the booth (assume a Poisson distribution). A booth worker takes 3.75 minutes,
Calculate the three months moving average forecast : 1. Calculate the three months moving average forecast for the month of February.
Should ligaya management proceed with the capital structure : Should LIGAYA's management proceed with the capital structure change? Why? LIGAYA, which has no current debt, has a beta of 0.95
Most critical in global economy : Of the problems that affect the success of an acquisition, which one do you believe is the most critical in the global economy?
What alternatives can the manufacturers think : Which production planning strategy best describes this approach? What alternatives can the manufacturers think of in lieu of suggested strategy?
Increase an industry profitability : Discuss how companies can use (a) product differentiation and (b) capacity control to manage rivalry and increase an industry's profitability.
Do you think was a fair sentence about shavertown : Do you think this was a fair sentence? Why or why not? LLC was indicted for embezzling over $375,000 of his clients' payroll tax remittances

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