Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Capital structure theory:
Use the following information to answer the questions:
Case I: Capital structure theory (no tax)
Case II: Capital structure theory (corporate tax)
WACC : 10%
Debt-to-firm value(D/V) : 50%
Cost of debt : 6%
EBIT : $40 million
Tax rate : 50%
Unlevered cost of capital : 10%
a. In Case I, when the debt-to-firm value decreases to 40%, figure out the new WACC. And does the cost of equity increase or decrease?
b. In Case II, when the debt is zero, figure out the firm's value based on the assumption that EBIT is constant forever. Again, when the debt increases to $30mil., figure out the firm's value?
c. In Case II, when the debt increases to $30mil., does the WACC increase or decrease or stay the same? And does the cost of equity increase or decrease?
Definition of 'Bank Credit': The amount of credit available to a business or individual from the banking system. It is the aggregate of the amount of funds financial instituti
1 Explain the difference between a forward start option and a package. Outperformance certificates are offered to investors by many European banks as a way of investing in a com
Explain and critically evaluate : a) The relevance of committed fixed costs in deciding the optimal mix of products to maximum a company's profit and the importance of relevant
1. The Gulf had sales of AED 20,000,000 and cost of goods sold of AED 10,250,000. Selling and administrative expenses represented 8 percent of sales. Depreciation was 5 percent o
It is, usually, not possible to totally eliminate both translation exposure and transaction exposure. In few cases, the elimination of one exposure will as well eliminate the othe
Provide three examples of mutually exclusive projects. Mutually elite projects are projects that compete against each other for our selection. If a firm were considering the b
Q. What is Adjusted Basis? Adjusted Basis - After a taxpayer's basis in property is determined, it should be adjusted upwardto include any additions of capital to the property
A 10-year, 12% semi-yearly coupon bond with a par value of $1,000 may be called in 4 years at a call price of $1,050. The bond sells for $1,050. (Suppose that the bond has just bee
What are some of the primary advantages when a corporation has operations in countries other than its home country? What are some of the risks? Foreign operations may decrease a
Q. What is Evaluation of Credit Policy? Evaluation of Credit Policy: - A credit policy is prepared to maintain the investment in receivables at optimum level. Receivable Turnov
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd