Deng Inc.’s EBIT changes by 20%. The firm computed that they have a Degree of financial leverage of 3. What is the expected change in the earnings per share of Deng Inc.? A. 6% B. 6.67% C. 60% D. 66.67%

Q: A firm has total assets of $1 million and a debt ratio of 30%. Currently, it has sales of $2.5…

A: Working note:

Q: ABC Company is currently an unlevered firm. The company expects to generate $152.3 in earnings…

A: In the given question we need to compute the new value of ABC Company.

Q: Albatross Airline’s fixed operating costs are $5.7 million, and its variable cost ratio is 0.25. The…

A: Given: Particulars Amount Sales $10,000,000 Fixed cost $5,700,000 Shares 70000 Preference…

Q: Bl Inc currently has earnings before interest and taxes of P3,000,000, a degree of combined leverage…

A: The degree of operating leverage can be used to estimate change in operating income with respect to…

Q: McCormack co. Wishes to maintain a growth rate of 6 percent a year, a debt equity ratio of 0.49, and…

A: Calculation of profit margin: Answer: Profit margin is 12.76%

Q: Omni Consumer Products just paid a dividend of 1.34 and anticipates a short term growth rate of 16%…

A: Using Dividend Discount Model

Q: The newspaper reported last week that Tisch Enterprises earned $34.17 million this year. The report…

A: Calculation of Earnings Growth and Next Year’s Earnings:The earnings growth is 13.50%.

Q: Badidap Co., a company with a 25% debt-to-equity ratio, has a weighted average cost of capital of…

A: Weighted Average cost of capital (WACC): The WACC is the overall cost of capital from all the…

Q: а. samm Corp had salės of $300 illion, a net pront margin of 8% and a dividend payout ratio of 30%.…

A: Sales = 300,000,000 Net Income = Net Profit Margin * Sales Net Income = 8%*300,000,000 Net Income =…

Q: Marginal Incorporated (MI) has determined that its before-tax cost of debt is 10.0%. Its cost of…

A: (in million dollar) weight (%) Capital required(in million dollar) Value of debt 372 62 181.66…

Q: A firm with a return on common equity (ROCE) of 25% has financial leverage of 35 % and a net…

A: Return on common equity (ROCE)= 25% Net borrowing cost (NBC)= 5% Financial leverage (FLEV)= 35%

Q: what will be the new net income?

A: Financial leverage means the degree by which a company uses fixed income securities or outside…

Q: Standard, Inc. reported EBIT of $57.00 million for last year. Depreciation expense totaled $20…

A: In the given question we need to compute the current value (in millions) of Standard's equity.

Q: Bridgette Inc. has forecasted that its net income will be P400,000. The company has debt ratio of…

A: Given Information : Net Income = P400,000 Debt ratio = 30%Project Investment = P500,000 Number of…

Q: WICO Databank Limited has a debt-equity ratio of 0.45. The required return on the company's…

A: WACC increases with an increase in beta, which represents an increment of systematic risk.

Q: ou have looked at the current financial statements for J&R Homes, Co. The company has an EBIT of…

A: Financial Statement- Financial statements contain information on an entity's financial activity and…

Q: Chamin, Inc. has earnings before interest and taxes (EBIT) of $375,000. Chamin has interest expense…

A: The degree of financial leverage shows the effect of fixed financial costs on the earnings of the…

Q: XYZ anticipates earning $1,800,000 and paying $300,000 in dividends this year. XYZ's capital…

A: equity break point=retained earningfraction of equity

Q: Suppose a firm has a retention ratio of 60 percent, net income of $8 million, and 4 million shares…

A: Retention ratio = 60% Net income = $8 million Number of shares = 4 million

Q: What is the value of this firm?

A: Value of Levered Firm: It is estimated by the sum of the value of the unlevered firm and the…

Q: Blue Co., a firm that grows at a constant rate of 5%, is trying to estimate its weighted average…

A: Growth rate (g) = 5% Recent dividend (D0) = P5 Current share price (P0) = P52.50

Q: Triangular chemicals has total assets of $107 million, a return on equity of 35 percent, a net…

A: Total assets = $ 107 million Return on equity = 35% Net profit margin = 5.5% Equity multiplier =…

Q: Last year Jullan Corp. had sales of P302,225 operating costs of P267,500 and year-end assets of…

A: Ratio is a tool which is used to measure the firm’s performance by establishing relation of…

Q: Ramble On Co. wishes to maintain a growth rate of 6 percent a year, a debt-equity ratio of 0.49, and…

A: Calculate the return on equity as follows: Growth rate=ROE×Retention ratio1-ROE×Retention…

Q: Plank’s Plants had net income of $10,000 on sales of $100,000 last year. The firm paid a dividend of…

A: Given information in question :- Company net income     =$10,000 Company sales…

Q: McMichael, Inc has expected sales of $40 million.  Fixed operating cost is $5 million and the…

A: 1) Computation:

Q: company has a capital structure of 70% debt and 30% equity. Annual before tax cost of debt is 12%…

A: Weighted average cost of capital is the rate that a company is expected to pay on average on all the…

Q: A firm has a tax burden ratio of .75, a leverage ratio of 1.25, an interest burden of .6, and a…

A: Formula:

Q: A firm has total assets of $1,000,000 and a debt ratio of 30 percent. Currently, it has sales of…

A: Return on equity (ROE):It is a profitability measure that is related with the firm's equity. It is…

Q: NEKO Inc. has forecasted that its net income will be P400,000. The company has debt ratio of 30%.…

A: Net income (NI) = P400,000 Debt ratio = 30% Equity ratio (ER) = 100%-30% = 70% Investment…

Q: Grandin Inc. is evaluating its dividend policy. It has a capital budget of $625,000, and it wants to…

A: Under residual dividend payout method, the amount of retained earnings left after financing the…

Q: NUBD had 5 degrees of operating leverage when its profit before taxes was P200,000. If the company's…

A: Given,  Degree of operating leverage = 5 Increase in sales = 15%

Q: Dan Corp. has a degree of financial leverage of 2. Third Corp. will experience a 75% increase in…

A: The degree of operating leverage measures the change in operating income in relation to a change in…

Q: BN had 5 degrees of operating leverage when its profit before taxes was P200,000. If the company’s…

A: Degree of operating leverage = % change in operating income% change in sales…

Q: Bulldogs Inc. currently has earnings before interest and taxes of P3,000,000, a degree of combined…

A: Degree of Operating Leverage = Degree of Combined Leverage / Degree of Financial Leverage = 8 / 2 =…

Q: A company retains 7,50,000 out of its current earnings. The expected rate of return to the…

A: Cost of retained earnings = Amount of Retained Earnings X [Expected Percentage of return on funds to…

Q: A firm with sales of $1,000,000, net profits after taxes of $60,000, total assots of $1,500,000, and…

A: Return on equity means the amount of profit as percentage of equity. Equity means the amount that…

Q: Last year, Headline News Corporation paid $600,000 in dividends and retained $360,000 of the…

A: Dividend: It is that share of the profit which is distributed among the company’s shareholders.

Q: Compute the degree of financial leverage for a firm with EBIT of P6,000,000, fixed costs of…

A: Degree-of-Financial Leverage or DFL shows effect of variation in earnings of an entity or EBIT due…

Q: Ornaments, Inc., is an all-equity firm with a total market value of $641,000 and 30,600 shares of…

A: Scenario: RecessionEBIT = EBIT when economy is normal x (1 - 15%) = $ 91,700 x (1 - 15%) = $ 77,945

Q: NUBD had 5 degrees of operating leverage when its profit before taxes was P200,000. If the company’s…

A: Solution: Profit before taxes will increase by = Increase in sales *  degrees of operating leverage…