compute the weighted average cost of capital.
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A company will be financing its operations with a capital budget of P40,000,000 and a debt-to-equity ratio of 1. The interest rate on the company's debt is 10%. The expected return on equity by the shareholders is 16.66% while the budgeted net income by management is P6,000,000. Assuming that the company's tax rate is 40%, compute the weighted average cost of capital.
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- a company will be financing its operations with and a capital budget is 40,000,000 and a debt to equity ratio of 1. the interest rate on company's debt is 10%. the expected return on equity by the shareholders is 16.66% while the budgeted net income by management is 6,000,000. Assuming that the company's rate is 40%, compute the weighted average cost of capitalTong foong Co. Ltd has decided that its capital budget during the coming year will be $20 million ($20,000,000) , the optimal capital structure is 60% equity and 40% debt , its earnings before interest and taxes (EBIT) are projected to be $34,667 million for the year . the company has $200,000,000 of assets, its average interest rate on outstanding debts is 10% and its tax rate is 40%. Required ; a. how much debt is outstanding (in dollars) and what is the cost of debtfor the period ? b. compute the earnings after tax ( net income) c. how much equity is required for the coming year capital budget ? d. if the company follows the residual dividend policy and maintains the same capital structure, what will its dividend payout (in $) and the dividend payout ratio ( in%) ?The projected capital budget of Kandell Corporation is $725,000, its target capital structure is 60% debt and 40% equity, and its forecasted net income is $725,000. If the company follows a residual dividend policy, what total dividends, if any, will it pay out?
- Tong Foong Co. Ltd. has decided that its capital budget during the coming year will be $20 million. Its optimal capital structure is 60 percent equity and 40 percent debt. Its earnings before interest and taxes (EBIT) are projected to be $34.667 million for the year. The company has $200 million of assets; its average interest rate on outstanding debt is 10 percent; and its tax rate is 40 percent. Required: How much debt is outstanding (in dollars) and what is the cost of the debt (in dollars) for the period? Compute the Earnings After Tax (Net Income)? How much equity is required for the coming year capital budget? If the company follows the residual dividend policy and maintains the same capital structure, what will its dividend payout (in $) and the dividend payout ratio (in %)?Tong Foong Co. Ltd. has decided that its capital budget during the coming year will be $20 million. Its optimal capital structure is 60 percent equity and 40 percent debt. Its earnings before interest and taxes (EBIT) are projected to be $34.667 million for the year. The company has $200 million of assets; its average interest rate on outstanding debt is 10 percent; and its tax rate is 40 percent. (i). How much debt is outstanding (in dollars) and what is the cost of the debt (in dollars) for the period? (ii). Compute the Earnings After Tax (Net Income)? (iii). How much equity is required for the coming year capital budget? (iv). If the company follows the residual dividend policy and maintains the same capital structure, what will its dividend payout (in $) and the dividend payout ratio (in %)?Tong foong Co. Ltd has decided that its capital budget during the coming year will be $20 million ($20,000,000) , the optimal capital structure is 60% equity and 40% debt , its earnings before interest and taxes (EBIT) are projected to be $34,667 million for the year . the company has $200,000,000 of assets, its average interest rate on outstanding debts is 10% and its tax rate is 40%. d. if the company follows the residual dividend policy and maintains the same capital structure, what will its dividend payout (in $) and the dividend payout ratio ( in%) ?
- Fena Company has a capital budget of P1.2 million. The company wants to maintain a target capital structure that is 60% debt and 40% equity. The company forecasts that its net income this year will be P600,000. If the company follows a residual distribution model and pays all distributions as dividends, what will be its payout ratio?LoveDebt Ltd. has a target capital structure which consists of 60% of debt and 40% of equity. The company anticipates that its capital budget for the upcoming year will be $3,500,000. If LoveDebt Ltd. reports net income of $2,500,000 and it follows a residual dividend payout policy, what will be its dividend payout ratio?Hamilton Corporation has a target equity ratio of 65%, andits capital budget is $2 million. If Hamilton has net income of$1.6 million and follows a residual distribution model, how muchwill its distribution be? ($300,000)
- Driver Corporation faces an IOS schedule calling for a capital budget of $60 million. Its optimal capital structure is 60% equity and 40% debt. Its earnings before interest and taxes (EBIT) were $98 million for the year. The firm has $200 million in assets, pays an average of 10% on all its debt, and faces a marginal tax rate of 34 percent. If the firm maintains a residual dividend policy and will keep its optimal capital structure intact, what will its dividend payout be after financing its capital budget? Calculation needed.Tong Foong Co. Ltd. has decided that its capital budget during the coming year will be $20 million. Its optimal capital structure is 60 percent equity and 40 percent debt. Its earnings before interest and taxes (EBIT) are projected to be $34.667 million for the year. The company has $200 million of assets; its average interest rate on outstanding debt is 10 percent; and its tax rate is 40 percent. Required: If the company follows the residual dividend policy and maintains the same capital structure, what will its dividend payout (in $) and the dividend payout ratio (in %)?Brock Brothers wants to maintain its capital structure which is 30 percent debt and 70 percent equity. The company forecasts that its net income this year will be $1,000,000. The company follows a residual distribution policy and anticipates a dividend payout ratio of 40 percent. What is the size of the company’s capital budget? a) $600,000 b) $857,143 c) $1,000,000 d) $1,428,571 e) $2,000,000