[7] In 2020 the return on assets was 14% and the debt ratio was 40%. Compute the return on equity. (a) 13.33% (b) 16.67% (c) 20% (d) 23.33% (e).........
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![[7] In 2020 the return on assets was 14% and the debt ratio was 40%. Compute the return on equity.
(a) 13.33%
(b) 16.67%
(c) 20%
(d) 23.33%
(e)..](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa4a2a96e-9312-4ab3-9761-7892d9f56d7b%2Fc10bb53a-7012-4a8d-9228-da098f73977c%2Fu4u9iih_processed.png&w=3840&q=75)
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- Consider the following informationYear Profit Ending book value of assets Ending book value of debt1 $100 $1 030 $7202 $120 $1 060 $7403 $60 $1 000 $800At the end of year t, the company’s book value of assets and debt are $1 000 and $700, respectively. The analyst expects that after year t+3 profit will be $0 and the book values of assets and debts will not change from the prior year. The cost of equity (WACC) is 10 per cent. Calculate the present value of free cash flows for the end of each year.Super Co. is currently keeping a constant debt-to-equity policy with a debt-to value ratio of 30%. The after-tax unlevered cashflow is 35,000,000 a year in perpetuity and the unlevered value of assets is 545,000,000. The cost of debt is 4.45% and the tax rate is 34%. What is the levered return on equity? ans: rE=7.27% please write the stepsFor the next fiscal year, you forecast net income of $52,000 and ending assets of $503,400. Your firm's payout ratio is 9.5%. Your beginning stockholders' equity is $295,400, and your beginning total liabilities are $119,200. Your non-debt liabilities, such as accounts payable, are forecasted to increase by $10,300. What will be your net new financing needed for next year?
- Suppose that a company yields mean returns of 20% (equity), and 9% mean returns on every peso the company invests (debt) in a certain alternative. What would be the best decision if the MARR and ROR calculated is 12%?10 Alawad Company’s capital employed on 1-1 2020 was OMR 150,000 and the profits for the last five years were as follows: Year 2015 OMR 10,000, Year 2016 OMR 20,000, Year 2017 OMR 10,000, Year 2018 OMR 25,000 and Year 2019 OMR 15,000. Calculate Super profit given that the normal rate of return is 5%. a. OMR 7,500 b. OMR 8,500 c. None of the options are correct d. OMR 16,000QUESTION: Calculate Market Value of Debt Additional Info: Analysts expect the firm’s revenues, earnings, capital expenditures, and depreciation to grow at 9.9% a year from 2019 to 2021, after which time the growth rate is expected to drop to 3%. The depreciation expense for 2019 is $5.182 billion. Capital spending is expected to offset depreciation in the stable state period. The yield on 30-year treasury bonds is 2% and the equity market risk premium is 6.2%. The shares outstanding as of 12/31/2019 were 3,516,000,000 and the stock price was $60 per share. The average price of the company’s long-term corporate Bonds was 123.95 with an average yield to maturity of 4.16%. The company’s long-term bonds have a bond rating of AA. Shares Outstanding 3,516,000,000 Stock Price $60 Yield (30Y Treasury) 2% Equity Market Risk Prem. 6.2% Avg. Price LT Corp. Bond 123.95 Avg. YTM 4.16% Depreciation Expense (2019) 5,182,000,000 Current Stock Price…
- A firm has a return on assets of 7.8 percent and a cost of equity of 11.9 percent. What is the pretax cost of debt if the debt–equity ratio is .72? Ignore taxes.A company has EBITDA of $600 million, interest payments of$60 million, lease payments of $40 million, and required principalpayments (due this year) of $30 million. What is its EBITDAcoverage ratio? (4.9)Blue Fire, Inc., has sales of $60 million, total assets of $42 million, and total debt of $18 million. If the Return on Assets of 15 percent, what is the ROE? Question 1 options: 25.4% 10.2% 17.8% 20.3% 22.8%
- Super Co. is currently keeping a constant debt-to-equity policy with a debt-to value ratio of 30%. The after-tax unlevered cashflow is 35,000,000 a year in perpetuity and the unlevered value of assets is 545,000,000. The cost of debt is 4.45% and the tax rate is 34%. What is the levered return on equity?470 -36 Assume that the dividend payout ratio will be 55 % when the rate on long term government bonds falls to 9%. Since investors are becoming more risk averse, the equity risk premium will rise to 8% and investors will require a 7% return. The return on equity will be 13%. What is the expected sustainable growth rate? a. 5.85 b. 7.15 c. 4.05 d. 6.75 e. 8.253 Suppose that the principal of a synthetic CDO is $125 million. The equity, mezzanine, and senior principals are $10 million, $25 million, and $90 million respectively. Which tranche(s) is responsible for payouts of $7 million due to defaults by companies in the portfolio? Which tranche(s) is responsible if those payments rise to $14 million?
