Limoilou Corp. uses no debt. The weighted average cost of capital is 8.0%. If the current market value of the equity is $13 million and there are no taxes, what is EBIT? (Omit $ sign in your response.) EBIT
Q: Limoilou Corp. uses no debt. The weighted average cost of capital is 6.7%. If the current market…
A: Given, Cost of Capital = 6.7% Market Value of Equity = $28 million
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A: Given, The market value of debt is $3 million The market value of equity is $6 million.
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A: Cost of debt = 7% Cost of equity = 15% Debt-asset ratio = 0.40 Equity-asset ratio = 1-0.40 = 0.60
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A:
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A: Here, Value of Common Stock is $62 million Value of Debt is $38 million Return on Equity is 16.8%…
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A:
Q: Shadow Corp. has no debt but can borrow at 7.9 percent. The firm's WACC is currently 9.7 percent,…
A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: Kose, Inc., has a target debt-equity ratio of 1.31. Its WACC is 8.1 percent, and the tax rate is 22…
A: Kose, Inc., has a target debt-equity ratio of 1.31. Its WACC is 8.1 percent, and the tax rate is 22…
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A: Market Value of equity is calculated by net income with this formula. Value of equity = Net…
Q: Thrice Corp. uses no debt. The weighted average cost of capital is 9.9 percent. The current market…
A: Weighted Average Cost of Capital = 9.9% or 0.099Market Value of the Equity = $18,500,000Tax Rate =…
Q: Irving Corp. has no debt but can borrow at 7.25 percent. The firm's WACC is currently 13 percent,…
A: When firm does not have debt, cost of equity = WACC. Firm's cost of equity when it has 25% debt:…
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A: Given, The W.C. Pruett Corp. has $600,000 of interest-bearing debt outstanding,and it pays an annual…
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A: levered cost of equity formula: re=ru+DV-D×ru -rd×1-taxwhere,re= levered cost of equityru= unlevered…
Q: Fama's Llamas has a weighted average cost of capital of 10.4 percent. The company's cost of equity…
A: Debt-Equity Ratio is long-term solvency ratio of company. It is calculated by dividing debt by…
Q: Fama’s Llamas has a weighted average cost of capital of 10.4 percent. The company’s cost of equity…
A: WACC = 10.40% Cost of equity = 13% Pretax cost of debt =7.90% After tax cost of debt = Pretax cost…
Q: Outhouse Bottled Water is comparing two different capital structures. Under plan A,Outhouse would…
A: Break-even EBIT is the level of EBIT at which EPS of two firms will be same. That is:
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A: Debt to equity ratio is 0.8, required return is 12% and cost of equity is 15.68%Since, debt / equity…
Q: Braxton Corp. currently has one million shares outstanding but no debt. If needed, however, the…
A: WACC = Weight in Equity * Cost of equity + Weight in debt *Cost of debt * (1- tax)
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Q: A firm has a cost of debt of 6.2 percent and a cost of equity of 13.3 percent. The debt–equity ratio…
A: Cost of debt = 6.2% Cost of equity = 13.3% Debt-equity ratio = 0.96 Debt-asset ratio = Debt equity…
Q: Once Bitten Corp. uses no debt. The weighted average cost of capital is 9 percent. If the company's…
A: Given EBIT = $1980000 Cost of capital = 9%
Q: Lamont Corp. is debt-free and has a weighted average cost of capital of 12.7 percent. The current…
A: Given information : Weighted average cost of capital = 12.7% Current market value of equity = $2.3…
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A: Calculation of cost of capital of common equity
Q: you were hired as a consultant to ABC Company, whose target capital structure is 35% debt, 15%…
A: The weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which…
Q: Fama's Llamas has a weighted average cost of capital of 10.4 percent. The company's cost of equity…
A: By using the formula of the weighted average cost of capital, the value of debt and equity can be…
Q: Clifford, Inc., has a target debt-equity ratio of .80. Its WACC is 9.1 percent, and the tax rate is…
A: WACC is a weighted average cost of all the sources of capital. It is equal to the sum of products of…
Q: We've found that the total value of VetaTaco is $2 million. The firm has $600,000 of debt financing.…
A: Total value (V) = $2,000,000 Debt value (D) = $600,000 Equity value (E) = $2,000,000-600,000 =…
Q: Butler, Inc., has a target debt-equity ratio of 1.60. Its WACC is 7.8 percent, and the tax rate is…
A: WACC = Post tax Cost of debt * Weight of debt + Cost of equity * Weight of equity
Q: The common stock and debt of Northern Sludge are valued at $65 million and $35 million,…
A: value of equity = 65 millions value of debt = 35 millions firm's value = 65 millions +35 millions =…
Q: Buggins Inc. is financed equally by debt and equity, each with a market value of $1 million. The…
A: The question is related to Cost of capital. It is given that the present capital structure consists…
Q: I had asked this question previously but the answer was incorrect from what my professor had put on…
A: Calculation of Pretax Cost of Debt:Assuming the pretax cost of debt as X.The pretax cost of debt is…
Q: ABC company and XYZ company have identical assets and currently they both have a debtequity ratio of…
A: Solution- Cost of debt = Kd = 4% Ccost of equity Ke = 20% Debt to equity ratio = 1 =>…
Q: Wintermelon Corp.'s controller is considering a change in the capital structure consisting of 40%…
A: Unlevered beta =Levered beta /1+D/E(1-t)
Q: Dilana Corporation., has no debt outstanding and a total capital of $600,000. Operating earnings…
A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: what is the weighted average cost of capital?
A: Information Provided: Cost of equity = 12.8% YTM on bonds = 5.3% Tax rate = 35% Debt-Equity ratio =…
Q: Nolan Corp. uses no debt. The weighted average cost of capital is 6.4 percent. The current market…
A: An unlevered firm is one which uses no debt in its capital structure which means there are no…
Q: Fama’s Llamas has a weighted average cost of capital of 8.4 percent. The company’s cost of equity is…
A: The formula used is shown:
Q: Roy's Welding has a cost of equity of 14.1 percent and a pretax cost of debt of 7.7 percent. The…
A: Modigliani-Miller Theorem (M&M Theorem) was developed by Franco Merton and Merton Miller. The…
Q: Cowen Company has EBIT of 600,000, company's Debt-to-equity ratio (market value) is 0.6, and the…
A: Meaning of cost of capital:- It represents the return of a company that needs to achieve in order…
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- Thrice Corp. uses no debt. The weighted average cost of capital is 4.8 percent. If the current market value of the equity is $23 million and there are no taxes, what is EBIT? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g. 1,234,567.)Sugar Skull Corporation uses no debt. The weighted average cost of capital is 8 percent. If the current market value of the equity is $13 million and there are no taxes, what is EBIT? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) What is the EBITLamont Corp. is debt-free and has a weighted average cost of capital of 12.7 percent. The current market value of the equity is $2.3 million and there are no taxes. According to M&M Proposition I, what will be the value of the company if it changes to a debt-equity ratio of .85?
- LMNOP Corporation uses no debt. The weighted average cost of capital is 9.2 percent. If the current market value of the equity is $31.7 million and there are no taxes, what is EBIT? Round to the nearest dollar and format as "X,XXX,XXX"Wako and Sons Inc. has no debt, a WACC of 14% and a tax rate of 40%. If the company chooses to change its capital structure to a debt equity ratio of 40% (D/E=0.4), what is the new cost of equity RE? a. 17.4% b. 22.4% c. 19.0% d. 19.6% e. None of the above.Shadow Corp. has no debt but can borrow at 7.9 percent. The firm's WACC is currently 9.7 percent, and the tax rate is 23 percent. a. c. What is the firm's cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the firm converts to 35 percent debt, what will its cost of equity be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) If the firm converts to 50 percent debt, what will its cost of equity be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) d-1. If the firm converts to 35 percent debt, what will the company's WACC be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) d-2. If the firm converts to 50 percent debt, what will the company's WACC be? (Do not round intermediate calculations and…
- Gunnar Corp uses no debt. The weighted average cost of capital is 9 percent. If the current market value of the equity is $37 million and there are no taxes, what is the cost of equity for this corporation? 8% 7% 6% 9%Thrice Corp. uses no debt. The weighted average cost of capital is 9.9 percent. The current market value of the equity is $18.5 million and the corporate tax rate is 25 percent. What is EBIT? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.)The Rivoli Company has no debt outstanding, and its financial position is given by the following data: Expected EBIT = $600,000Growth rate in EBIT gL = 0% Cost of equity, rs = 10%Shares outstanding, n0 = 200,000 Tax rate, T (federal-plus-state) = 25% a. What is Rivoli’s intrinsic value of operations (i.e., its unlevered value)? What is its intrinsic stock price? Its earnings per share?b. . Rivoli is considering selling bonds and simultaneously repurchasing some of its stock. If it moves to a capital structure with 30% debt based on market values, its cost of equity , rs, will increase to 12% to reflect the increased risk. Bonds can be sold at a cost, rd, of 7%. Based on the new capital structure, what is the new weighted average cost of capital? What is the levered value of the firm? What is th amount of debt?c. Based on the new capital structure, what is the new stock price? What is the remain-ing number of shares? What is the new earnings per share?
- Kendall Corporation has no debt but can borrow at 6.5 percent. The firm’s WACC is currently 10 percent, and there is no corporate tax. What is the company’s cost of equity? Note: Do not round intermediate calculations and enter your answer as a percent rounded to the nearest whole number, e.g., 32. If the firm converts to 10 percent debt, what will its cost of equity be? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. If the firm converts to 45 percent debt, what will its cost of equity be? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. What is the company’s WACC in parts (b) and (c)? Note: Do not round intermediate calculations and enter your answers as a percent rounded to the nearest whole number, e.g., 32.Roy's Welding has a cost of equity of 14.1 percent and a pretax cost of debt of 7.7 percent. The required return on the assets is 13.2 percent. What is the debt-equity ratio based on M&M II with no taxes?Kay Corp is comparing 2 different capital structure. Plan I would in 7,000 shares of stocks and RM160,000 in debt. Plan II would result in 5,000 shares of stock and RM240,000 in debt. The interest rate on the debt is 10%. a) Assuming that the corporate tax rate is 40%. Calculate the break-even levels of EBIT and state the reasons. b) Ignoring taxes what is the price per share of equity under Plan I? Plan II? What principles is illustrated by your answer?
