Compute the percentage change of Earnings Per Share Compute the Combined Leverage of the expected unitCompute the Operating Leverage of the expected units. Compute the Financial Leverage of the expected units.Compute the cOMBINED Leverage of the expected units. Zian Flick's Capital structure has total capital of P500,000consisting of P300,000 of 6% debentures and P200,000 ofequity shares of P100 each. The company currently sells50,000 units @ P8 per unit. Variable cost is P3 per unit. Fixedcost is P80,000. The tax rate is 50%. In the coming financialyear the company expects an increase of 20% in the salesvolume.

First of we will have to establish the old and new income statement Old income statement

Answered: Compute the percentage change of…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 13P

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Hasting Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.4 (given its target capital structure). Vandell has $10.82 million in debt that trades at par and pays an 8% interest rate. Vandell’s free cash flow (FCFJ is $2 million per year and is expected to grow at a constant rate of 5% a year. Vandell pays a 40% combined federal and state tax rate. The risk-free rate of interest is 5%, and the market risk premium is 6%. Hasting’s First step is to estimate the current intrinsic value of Vandell. What are Vandell’s cost of equity and weighted average cost of capital? What is Vandell’s intrinsic value of operations? [Hint: Use the free cash flow corporate valuation model from Chapter 8.) What is the current intrinsic value of Vandell’s stock?
Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%? What are the projected sales in Years 1 and 2? What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2? What is the projected FCF for Year 2?

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Compute the percentage change of Earnings Per Share Compute the Combined Leverage of the expected unit Compute the Operating Leverage of the expected units. Compute the Financial Leverage of the expected units.