Cookies 'n Cream, Incorporated, recently issued new securities to finance a new TV show. The project cost $45 million, and the company paid $2.2 million in flotation costs. In addition, the equity issued had a flotation cost of 7 percent of the amount raised, whereas the debt issued had a flotation cost of 2 percent of the amount raised. If the company issued new securities in the same proportion as its target capital structure, what is the company's target debt-equity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616.) Debt-equity ratio
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- Delights, Inc., recently issued new securities to finance a new TV show. The project cost $35 million, and the company paid $2.2 million in flotation costs. In addition, the equity issued had a flotation cost of 7 percent of the amount raised, whereas the debt issued had a flotation cost of 3 percent of the amount raised. If the company issued new securities in the same proportion as its target capital structure, what is the company’s target debt-equity ratio?Pardon Me, Inc., recently issued new securities to finance a new TV show. The project cost $14.7 million, and the company paid $795,000 in flotation costs. In addition, the equity issued had a flotation cost of 7.7 percent of the amount raised, whereas the debt issued had a flotation cost of 3.7 percent of the amount raised. If the company issued new securities in the same proportion as its target capital structure, what is the company’s target debt−equity ratio?A construction company has asked its chief financial officer to measure the cost of each specific form of capital as well as its weighted average cost of capital. The weighted average cost is measured using the following weights; 40% long-term debt, 10% preferred stock and 50% common stock equity. The company's tax rate is 40% Debt Company sells $980, a 10 year, $1,000 par value bond that pays a 10% coupon rate annually . Floatation cost is $35 of the per value and the bond is sold at discount of $20 per bond Preferred Stock : 8% preferred stock with par value of $100 is sold at $65 per share . In addition , the company has to pay an underwriting fee of $2 per share. Common stock : The current market value of the common stock is $50 per share . Next year , the dividend (2020 ) is 4 per share dividend payments , which have been approximately 60% of earnings per share in each of the last five years If the company decides to issue a new common equity , then the company must pay the the…
- Headland Inc. has decided to raise additional capital by issuing $191,000 face value of bonds with a coupon rate of 10%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $144,000, and the value of the warrants in the market is $16,000. The bonds sold in the market at issuance for $140,000.(a) What entry should be made at the time of the issuance of the bonds and warrants? b1) Prepare the entry if the warrants were nondetachableGoodday Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 365,000 shares of stock outstanding. Under Plan II, there would be 285,000 shares of stock outstanding and $3.6 million in debt outstanding. The interest rate on the debt is 10 percent and there are not taxes. At what EBIT the EPS of the two plans is the same? $109,500 $1,095,000 or $0 $1,095,000 $0Sweet Inc. has decided to raise additional capital by issuing $162,000 face value of bonds with a coupon rate of 10%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $136,850, and the value of the warrants in the market is $24,150. The bonds sold in the market at issuance for $145,500.(a) What entry should be made at the time of the issuance of the bonds and warrants? (b1) Prepare the entry if the warrants were nondetachable.
- Continental container corp. has decided to raise additional capital by issuing a $300,000 face-value of bonds with a coupon rate of 10%. in discussions with their investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of 10 warrants for each $1,000 bond sold. the value of the bonds without the warrants is considered to be $279,000, and the value of the warrants in the market is $10.3333 each. the bonds sold in the market at issuance and the company received $306,000 in cash. Required: Prepare the journal entry to record the issuance of the bonds and warrants.Wiley Solutions Inc. must raise $15,000,000 to support future growth. If it raises funds by issuing stock, WS must pay an investment banker 5 percent of the total amount issued plus $200,000 in other costs associated with the issue. What total stock value must WS issue to net $15,000,000 after flotation costs expense?Foundation, Inc., is comparing two different capital structures: an all- equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 145,000 shares of stock outstanding. Under Plan II, there would be 125, 000 shares of stock outstanding and $716, 000 in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes. a. If EBIT is $300, 000, which plan will result in the higher EPS? b . If EBIT is $600,000, which plan will result in the higher EPS? c. What is the break - even EBIT? d. use M&M Proposition I to find the price per share of equity under each of the two proposed plans. What is the value of the firm?
- Foundation, Incorporated, is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). UnderPlan I, the company would have 190,000 shares of stock outstanding. Under Plan II, there would be 140,000 shares of stockoutstanding and $2 million in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes.a. If EBIT is $625,000, what is the EPS for each plan?Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.b. If EBIT is $875,000, what is the EPS for each plan?Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.c. What is the break-even EBIT?Note: Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.a. Plan I EPSPlan II EPSb. Plan I EPSPlan II EPSc. Break-even EBITMoby Inc. is considering two alternatives to finance its construction of a new $2 million plant. (a) Issuance of 200,000 shares of common stock at the market price of $10 per share. (b) Issuance of $2 million, 8% bonds at face value.During the most current year, XYZ Corp paid $55,240 in interest and $80,400 in dividends. In order to fund a large expansion, the company also raised $297,000 in new equity and borrowed &197000 via the bond market, though a portion of the new borrowing was used to pay back $174,000 in bonds that were maturing this year. Calculate the cash flow to Shareholders.