A firm requires an investment of $30,000 and will return $35,500 after 1 year. If the firm borrows $20,000 at 7% what is the return on levered equity? O A. 41.0% O B. 32.8% OC. 57.4% O D. 49.2%

Q: a. The​ after-tax cost of debt using the approximation formula is______​%.​(Round to two…

A: Here, To Find: Part A. The​ after-tax cost of debt using the approximation formula =? Part B. WACC…

Q: The current value of a firm is $1,400. Te firm has $1,000 in pure debt due in one year and the…

A: Bonds are debts instruments that are issued by entities to raise funds and meet their capital…

Q: (Individual or component costs of capital) Compute the cost of capital for the firm for the…

A: Par Value = 1000 Semi Annual Interest Payment = 56.50 Current Value = 1126 N = 20 semi annual…

Q: Suppose that a company yields mean returns of 20% (equity), and 9% mean returns on every peso the…

A: The mean return on equity refers to the weighted average return on equity. The return on bonds is…

Q: A firm’s stockholders expect a 10% rate of return, and there is $15M in common stock and retained…

A: Expected rate of return=10%Common stock and retained earnings=15 millionLoan=4millionAverage rate…

Q: A firm has 65% probability of being worth $100 million and a 35% probability of being worth $130…

A: The expected return on the levered equity can be computed by: =Cost of Capital - (Cost of debt ×…

Q: A firm requires an investment of $30,000 and borrows $20,000 at 7%. If the return on equity is 16%…

A: The weighted average cost of capital (WACC) is a method of calculating a firm's cost of capital in…

Q: The WACC for a firm is 19.75 percent. You know that the firm is financed with OMR 75 million of…

A: Introduction WACC( Weighted Average Cost Of Capital) The Weighted Average Cost of Capital (WACC) of…

Q: Consider a simple firm that has the following market-value balance sheet: Assets Liabilities &…

A: Hey, since there are multiple subpart questions posted, we will answer the first three questions. If…

Q: A company has two investment possibilities, with the following cash inflows: If the firm can earn 7…

A: We need to use the concept of time value of money to solve the question. According to the concept of…

Q: A company finances its operations with 60 percent debt and the rest using equity. The annual yield…

A: Given: Debt (D) = 60% Equity (E) = 40% Cost of debt (rd) = 4.1% Cost of equity (re) = 12.4% Tax =…

Q: what will be the new net income?

A: Financial leverage means the degree by which a company uses fixed income securities or outside…

Q: Find the present value PV of the given investment (in dollars). (Round your answer to the nearest…

A: Future value = $8,000 Interest rate = 5% Time period = 8 months

Q: A business starts this year with 2,500,000 assets with no debt. The expected ROE equals 10%. Suppose…

A: Return on equity (ROE) is used to measure the returns from shareholder’s equity. Shareholder’s…

Q: Robi Axiata Limited has a book value of Tk 100 per share. Based on CAPM model, investors require an…

A: The value of the share is the present value of the dividends.

Q: According to the net present value method of capital budgeting, which investment(s) should the firm…

A: NPV: It is the difference between the present value of cash inflows and cash outflows. If the NPV…

Q: ABC requires an investment of $50,000 and borrows $20,000 at 6%. If the return on equity is 15%,…

A: Total capital required, C = $ 50,000Debt = D = 20,000Hence, equity = E = C - D = 50,000 - 20,000 =…

Q: Management of a firm with a cost of capital of 12 percent is considering a $100,000 investment with…

A: given, r = 12% Initial investment = $100,000 Annual cashflow = $44,524 n = 3 years

Q: Target Capital Structure of Moor Systems Inc is 60% common equity and 40% debt for long time. Now it…

A: The term capital structure refers to the structure of debt and equity financing in the company. A…

Q: You've collected the following information about Molino, Inc.: $205,000 Sales $ 14,200 $ 9,100…

A: Step 1: Calculate the retention ratio (b) as follows: Step 2: Calculate the return on equity (ROE)…

Q: A Security Company produces a cash flow of $210 per year and is expected to continue doing so in the…

A: The Modigliani-Miller Proposition I states that if there are no taxes in the economy then the usage…

Q: The Company has debtors of Rs. 6,00,000, Credit period is 2 months. PV ratio is 80%. Rate of return…

A: PV ratio = 80% Variable cost ratio = 100 - PV ratio = 100 - 80 = 20%

Q: BioCryst Pharmaceuticals have an equity Finance for $300,000 and has recently taken out a long term…

A: The Weighted average cost of capital(WACC) refers to the method in which each category of capital is…

Q: Company needs ghc1000 to finance its activities. The firm can finance this expenditure either by…

A: Given Information: Funds required by the company for its activities - ghc1000 Finance can be done…

Q: A firm has the market price of Rs. 38. A constant expected annual growth rate of 6% and a dividend…

A: Weighted Average Cost of Capital (WACC) is the overall cost of capital from all the sources of…

Q: Consider a firm that is currently all-equity financed. The firm produces a perpetual EBIT of $90m…

A: EBIT = $90 million Corporate tax rate = 30% Initial level of debt = $400 million Required return on…

Q: residual income

A: Residual income = Average operating assets * (Return on investment - Required rate of minimum return…

Q: QA) Tanten Company has 200% debt and 80% equity. The borrowing rate is 12%. (1) If you own 4% of…

A: (Note: Debt is 20% and equity is 80%) First we'll calculate the net income by deducting interest on…

Q: A firm’s current profits are P550,000. These profits are expected to grow indefinitely at a constant…

A: Firm Value: The value of a company, sometimes referred to as Firm Value (FV) or Enterprise Value…

Q: BBA Limited is a levered firm having a debt-equity ratio of 1:3. It has financed its capital via…

A: The question is related to Capital Budgeting and cost of capital. The Weighted Average Cost of…

Q: The firm want to add some leverage to their firm as they are running their business at a 0% debt…

A: First value of un-levered firm (VUL) is calculated as below: Here, EBIT = $198000 Tax = 34% Cost of…

Q: The Seattle Corporation has been presented with an investment yield end of year cash flows of…

A: NPV is calculated as sum of present value of cash inflows less initial investment

Q: A firm has 60,000 shares whose current price is $45.90. Those stockholders expect a return of 14%.…

A: Cost of capital = Market value of stock + market value of loan + market value of bonds

Q: (Individual or component costs of capital) Compute the cost of capital for the firm for the…

A: Note: I am providing the solution of the first three subparts. Please repost the remaining parts…

Q: Consider a firm that is currently all-equity financed. The firm produces a perpetual EBIT of $100m…

A: All the three parts can be solved in excel using the following method:

Q: Consider a simple firm that has the following market-value balance sheet: Assets Liabilities &…

A: Portfolio refers to basket of different financial assets in which investment is made by single…

Q: The free cash flow to the firm is reported as $300 million. The interest expense to the firm is $30…

A: Information povided

Q: f company’s debt-to-equity ratio is 0.25, what is the weighted average cost of capital for the…

A: WACC =(Cost of equity * Weight of equity) + (Cost of debt * Weight of debt)

Q: No.7 can maximize the market value of the firm as per Walter's model Accordingly, each year at…

A: Dividend payout is the ratio which defines the capacity of the company in paying off its…

Q: For the next fiscal year, you forecast net income of $48.300 and ending assets of $503.500. Your…

A: The debt-equity ratio helps to determine the amount of leverage in the company compared to the…

Q: A firm has a profit margin of 2% and an equity multiplier of 2.0. Its sales are $100 million, and it…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: An engineering firm has borrowed $1.0M at 6%. The stockholders have invested another $1.5M. The…

A: Retained earnings are those earnings which are available with the firm as an internal source of…

Q: Abacus Company has 30% debt and 70% equity. The borrowing rate is 12%. (1) If you own 5% of the…

A: Total value of firm is the total of value of debt and total of value of equity. To calculate return…

Q: A firm with sales of $1,000,000, net profits after taxes of $60,000, total assots of $1,500,000, and…

A: Return on equity means the amount of profit as percentage of equity. Equity means the amount that…

Q: A new company plans to obtain P18 million financing. The company expects to obtain a yearly income…

A: The financing strategy deals with the fundamental steps taken by an organization in order to achieve…

Q: a firm has an asset base with a market value of 5.3 million. ITs debt is worth 2.5 million. if 0.2…

A: Weighted average cost of capital can be used to estimate the rate which should be provided to…

Q: A firm needs $200,000 to start and expects   Sales                                $300,000…

A: Return on Owner's Investment = Net Income / Owner's equity Owner's equity in case 1 =$200,000…