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- Which of the following capital structures has the highest EBIT-EPS break-even point compared to an all equity capital structure? a. 25% debt / 75% equity b. 75% debt / 25% equity c. 50% debt / 50% equity d. 95% debt / 5% equityFirm A has the following data: Target capital structure of 46% debt, 3% preferred, and51% common equity; Tax rate = 40%; rd = 7%; rp = 7.5%; rs = 11.5%; and re = 12.5%.What is the firm’s WACC if it does not issue any new stock?Azoka Ltd has a market debt-equity ratio of 0.5. Assume its current debt cost of capital is 6.5%, andits equity cost of capital is 15%. If Azoka issues equity and uses the proceeds to repay its debtand reduce its debt-equity ratio to 0.4, it will lower its debt cost of capital to 5.75%. With perfectcapital markets, what effect will this transaction have on Azoka’s equity cost of capital andWACC?
- A firm has an ROA of 12 percent and an ROE of 52 percent. What is the firm's equity multiplier? Multiple Choice 0.23 4.33 1.63 2.90Bello Company has a debt-equity ratio of .6. Return on assets is 7.5 percent, and total equity is $486,000. a. What is the equity multiplier? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the return on equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the net income? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)Assume Skyler Industries has debt of $4,775,777with a cost of capital of 7.8% and equity of $5,798,398 with a cost of capital of 9.6%. What is Skyler’s weighted average cost of capital for equity? Round to the nearest hundredth, two decimal places and submit the answer in a percentage.
- Jack Corp. has a profit margin of 3.0 percent, total asset turnover of 2.3, and ROE of 17.45 percent. What is this firm’s debt-equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Fama’s Llamas has a weighted average cost of capital of 10.4 percent. The company’s cost of equity is 13 percent and its pretax cost of debt is 7.9 percent. The tax rate is 24 percent. What is the company's debt-equity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) Debt-equity ratio:______?Assume Skyler Industries has debt of $4,398,941with a cost of capital of 9% and equity of $5,435,265 with a cost of capital of 6.1%. What is Skyler’s weighted average cost of capital for debt? Round to the nearest hundredth, two decimal places and submit the answer in a percentage.
- Messman Manufacturing will issue common stock to the public for $30. Theexpected dividend and the growth in dividends are $3.00 per share and 5%,respectively. If the flotation cost is 10% of the issue’s gross proceeds, whatis the cost of external equity, re?Pickler Company has a debt-equity ratio of 1.39. Return on assets is 7.64 percent, and total equity is $695,000. a. What is the equity multiplier? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the return on equity? (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the net Income?XYZ Company has an existing capital structure mix of Debt 35%, preferred stock 15% and Common Stock 50%. a) Calculate Cost of Debt, if the cost of debt is 6% (effective rate) and its tax rate is 40% then what is the after-tax cost of debt? b) Calculate the Cost of preferred stock, if the market price for preferred stock is $100 per share, with a stated dividend of $10. c) Calculate Cost of Equity if Beta is 1.5 and the risk-free rate on a treasury bill is currently 5% and the market return has averaged 10%. d) Calculate Weighted Average Cost of capital for XYZ Company