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- The Gar~ngton O>rporation expects next year's net income to be $ 15 mHo~on. The Grm's debt/as sets ratio cu rrently is 40 perce nt Garlington has$12 mH~on of proGtable invesbnent opportuniti es. and it wishes to maintainexisting debt ratio. According to the residual di,;dend policy. how largeshould Garlington 's dividend pa)'OUtratio be next )"'arNEED ASAP. Solve correctly and show your computations. The H2 Corp has the following classes of share capital outstanding as of Dec 31, 2021. Ordinary share capital, P20 par value, 20,000 shares outstanding Preference share capital, 5% P100 par value, cumulative and partially participating 4%, 2,000 shares outstanding No dividends were paid on Preference shares for two years. On Dec 31, 2021 a total Cash dividend of P180,000 was declared. How much dividends will be received by the preference shares holders?E12-2 Chancellor lndustries has available retained earnings of $ 1.2 million. The company plans to make two investments that require financing of $ 950,000 and $ 1.75 million respectively. Chancellor uses a target capital structure with 60 percent debt and 40 percent equity. Apply the residual theory to determine the dividends that can be paid and calculate the resulting dividend payment ratio.
- (b) The Chief financial officer of Kurdishy Oil has given you the assignment of estimating thefirm’s cost of capital. The present capital structure, which is considered optimal, is as follows:Market ValueDebt $40 millionPreferred stock 5 millionCommon equity 55 millionThe anticipated financing opportunities are:1) Debt can be issued with a 15 percent before-tax cost.2) Preferred stock will be $100 par, carry a dividend of 13 percent, and can be sold at $96per share.3) Common equity has a beta of 1.20, rM = 17% and rf = 12%.Kurdishy’s tax rate is 40%.(i) Calculate the after-tax cost of debt, cost of preferred stock and cost of equity of GalaxyOil. (ii) What is the cost of capital of Kurdishy Oil? (iii) The CEO of Kurdishy asks you about the company’s capital structure. She wants toknow why the company doesn't use more preferred stock financing as it costs less thandebt. What would you tell the president? [Note: Confine your answer to no more acouple of lines.]Assume the following data for U&P Company: Debt (D) = $100 million; Equity (E) = $300 million; rD = 6%; rE = 12%; and TC = 30%. Calculate the after-tax weighted average cost of capital (WACC): Multiple Choice A) 10.5% B) 10.05% C) 15% D) 9.45%The Giant Machinery has the current capital structure of 65% equity and 35% debt. Its net income inthe current year is $250,000. The company is planning to launch a project that will requires aninvestment of $175,000 next year. Currently the share of Giant machinery is $25/share.Required:a) How much dividend Giant Machinery can pay its shareholders this year and what is dividendpayout ratio of the company? Assume the Residual Dividend Payout Policy applies. b) If the company is paying a dividend of $2.50/share and tomorrow the stock will go ex-dividend.Calculate the ex-dividend price tomorrow morning. Assuming the tax on dividend is 15%. c) Little Equipment for Hire is a subsidiary in the Giant Machinery and currently under the liquidationplan due to the severe contraction of operation due to corona virus. The company plans to paytotal dividend of $2.5 million now and $ 7.5 million one year from now as a liquidating dividend.The required rate of return for shareholders is 12%.…
- Blazingame Inc.'s capital components have the following market values. Debt$34,030,000Preferred Stock16,500,000Common equity47,860,000 Calculate the firm's capital structure and show the weights that would be used for a weighted average cost of capital (WACC) computation. Round the values to the nearest dollar and the weights to three decimal places of percentage. Debt$ fill in the blank 1 Values Weights Debt $ _____ Preferred Stock ____ _____ Common Equity ____ _____ $ _____ _____(a) Lexbel PLC generates earnings after tax (PAT) of 20 per cent on shareholders’ funds. Its currentcapital structure is as follows:£Ordinary shares of 25p each 300,000Reserves 400,000700,000The board of Lexbel PLC wishes to raise £180,000 from a right issue to expand existing operations. Itsreturn on shareholders’ funds will be unchanged. The current ex-dividend market price of Lexbel PLC is£1.90. Three different rights issue prices have been suggested by the finance director: £1.80, £1.60, and£1.40.(a) Determine the:i. number of shares to be issued,ii. theoretical ex-rights price,iii. expected earnings per share andiv. form of the issue for each rights issue price, andplease send the answers within 30 minsAssuming there are 500,000 shares outstanding common stock, what will be the yearly dividend per share be if the dividend policy is as follows: a. Small regular dividend of P0.75 plus a year-end extra of 40% of the profits exceeding P1million. b. An annual investment requirement of P1.8 million is to be funded. Capital structure is 50% debt and 50% equity. Residual Dividend policy is establised.
- Company XYZ, has the following capital structure: Debt $50M Common $30M Preferred of $20M Price of 5-year, par value 6% annual coupon Bonds that sell today for $1,050. Preferred dividend in year 1 of $5 and a preferred stock price of $90. Common stock has a required return of 12% Tax rate is 40% Solve for the Company WACC?Good Investments Company forecasts a $1.57 dividend for 2017, $1.68 dividend for 2018 and a $1.78 dividend for 2019 for Mountain Vacations Corporation. For all years after 2019, Good Investments Company forecasts that Mountain Vacations will pay a $1.89 dividend.Using the dividend discount valuation model determine the intrinsic value of Mountain Vacations Corporation, assuming the company’s cost of equity capital is 7%. Select one: a. $26.43 b. $22.02 c. $17.66 d. $24.99Assuming there are 500,000 shares outstanding common stock, what will be the yearly dividend per share be if the dividend policy is: An annual investment requirement of P1.8 million is to be funded. Capital structure is 60% debt and 40% equity. Residual Dividend policy is establised.
