Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Assume the capital structure of XYZ Company: 

 

Bonds payable, 10% . . . . . . . 500,000 

Preferred stock, 8%, P100 par . . . . . . . .  100,000 

Common stock, 100,000 shares. . . . . . .  400,000 

 

Other data shows as follows: 

 

Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . .  800,000 

Variable costs. . . . . . . . . . . . . . . . . . . . .  . 362,500 

Fixed Operating costs. . . . .. . . . . . . . . .  . 187,500 

Income tax rate . . . . . . . . . . . . . . .     30% 

Dividend growth rate . . . . . . . . . . . . . . . .      2% 

Current market price: 

Common stock. . . . . . . . . . . . . P5/share 

Preferred stock. . . . . . . . . . . . . P160/share 

Transaction costs: 

Common stock. . . . . . . . . . . . . . P1/share 

Preferred stock. . . . . . . . . . . . . . P 10/share 

 

Required:  Compute the following: 

  1. Net Income after tax 
  2. DOL 
  3. DFL 
  4. DTL 
  5. WACC 
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