5:33What is the firm's equity multiplier?The equity multiplier is given by:11 - Debt Ratio(DuPont analysis) Garwryk, Inc., which is financed with debt and equity, presently has a debt ratio of 78 percent.What is the firm's equity multiplier? How is the equity multiplier related to the firm's use of debt financing (i.e., if thefirm increased its use of debt financing would this increase or decrease its equity multiplier)? Explain.Equity Multiplier =The equity multiplier is|||=(Round to two decimal places.)VO) 1LTE2.II 4GO45%

Equity Multiplier :— It is ratio that shows the ability of company to finance assets from…

Answered: (DuPont analysis) Garwryk, Inc., which…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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FIN320 (DuPont analysis) Garwryk, Inc., which is financed with debt and equity, presently has a debt ratio of percent. What is the firm's equity multiplier? How is the equity multiplier related to the firm's use of debt financing (i.e., if the firm increased its use of debt financing would this increase or decrease its equity multiplier)? Explain. What is the firm's equity multiplier? The equity multiplier is given by: equity multiplier = 1/1-DEBT RATIO The equity multiplier is___. (Round to two decimal places.) How is the equity multiplier related to the firm's use of debt financing (i.e., if the firm increased its use of debt financing would this increase or decrease its equity multiplier)? Explain. (Select the best choice below.) A. If the company decreases its debt financing it will increase its debt ratio, therefore it will increase its equity multiplier. B. If the company increases its debt financing it will increase its debt ratio, therefore it will…
Garwryk, inc., which is finance with debt and equity, presently has a debt ratio of 78 percent. What is the firm’s equity multiplier? How is the equity multiplier related to the firm’s use of debt financing (i.e., if the firm increased its use of debt financing would this increase or decrease its equity multiplier)? Explain What is the firm’s multiplier? The equity multiplier is given by: Equity multiplier =1 1-debt ratio The equity multiplier is Round to two decimal places
3. ABC Corp.’s equity multiplier is 1.25. What is its debt ratio? 4.Easy Corp.’s return on assets measure is 0.20 (20%. Its return on equity measure is 0.25 (25%). What is the firm’s equity multiplier?
What is the debt ratio for a firm with an equity multiplier of 3.5? ____ 44.09 percent ____ 58.51 percent ____ 66.25 percent ____ 71.43 percent
What is the debt ratio for a firm with an equity multiplier of 3.5? Multiple Choice 44.09 percent 58.51 percent 66.25 percent 71.43 percent
2. Concatti Corporation hired your consulting firm to help them estimate the cost of equity. The yield on the firm's bonds is 10.50%, and your firm's economists believe that the cost of equity can be estimated using a risk premium of 4.85% over a firm's own cost of debt. What is an estimate of the firm's cost of equity from retained earnings?
A firm has a debt-to-equity ratio of 1.20. If it had no debt, its cost of equity would be 15%. Its cost of debt is 10%. What is its cost of equity if there are no taxes or other imperfections? A. 10% B. 15% C. 18% D. 21% E. None of these.
FINA's business risk (Ru) is 9% in the industry. The debt-to-equity ratio is 0.4. The cost of debt is 3%. The tax rate is 20%. What is the required return of equity (Re)?
Question: Assuming the debt-equity ratio is 0.70, what is the value of the Microsoft? Which factors are missing when calculating the firm value with just this amount of data? Shares outstanding: 7,753,000,000 Current stock price: 137.32
A firm has a debt-to-equity ratio of 1. Its levered cost of equity (Rs) is 10.4 %, and its pretax cost of debt(Rb) is 7%. Company Tax is 30%. Assuming MM (1963) world, calculate its unlevered cost of equity Ro)Provide the answer in percentage
A firm had a debt ratio of 0.85. The pretax cost of debt is 8% and the reqiured return on asset is 15.5%. What is the cost of equity if we factorin the firms tax rate of 24%? A) 19.53 B) 18.92 C) 21.57 D) 20.35 E) 20.96
Question 4 Weston Industries has a debt–equity ratio of 1.5. Its WACC is 11 percent, and its cost of debt is 7 percent. The corporate tax rate is 35 percent. What is Weston’s cost of equity capital? What is Weston’s unlevered cost of equity capital? What would the cost of equity be if the debt–equity ratio were 2? What if it were 1.0? What if it were zero? Shadow Corp. has no debt but can borrow at 8 percent. The firm’s WACC is currently 11 percent, and the tax rate is 35 percent. What is Shadow’s cost of equity? If the firm converts to 25 percent debt, what will its cost of equity be? If the firm converts to 50 percent debt, what will its cost of equity be? What is Shadow’s WACC in part (b)? In part (c)?

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