ong Foong Co. Ltd. has decided that its capital budget during the coming year will be $20 million. Its optimal capital structure is 60 percent equity and 40 percent debt. Its earnings before interest and taxes (EBIT) are projected to be $34.667 million for the year. The company has $200 million of assets; its average interest rate on outstanding debt is 10 percent; and its tax rate is 40 percent.   Required:  How much debt is outstanding (in dollars) and what is the cost of the debt (in dollars) for the period? Compute the Earnings After Tax (Net Income)? How much equity is required for the coming year capital budget?

Q: WorldTrans is forecasting an EPS of $5.00 for the coming year on its 500,000 outstanding shares of…

A: The amount that is borrowed by the company from financial institutions, banks, or by issuing the…

Q: The Fierro Corporation has annual credit sales of $6 million.  Current expenses for the collection…

A: Calculation of Incremental profit after tax using excel is as follows:

Q: Conventional Corporation is evaluating a capital budgeting project that will generate $600,000 per…

A: YEAR CASH FLOW      0  $                      (3,600,000.00) 1  $…

Q: What are Magnum's total financing needs (that is, total assets) for the coming year?

A: Total financing needs (total assets) refers to the total amount of capital required for the company…

Q: Blue Co. already determined the additional financing needed that it plans to raise through issuance…

A: = Net profit - Retained earnings = P1,800,000 - (2/3 * Net profit ) {Given} = 1,800,000 -…

Q: The financial manager has estimated a cost of P40 per transaction in case non-cash asset is…

A: Optimum cash balance is that optimum stage where the total cost of cash is minimum.

Q: Express Industry’s expected net income for next year is $1.6 million. Its target, and current,…

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Q: Bulldogs Inc. uses Additional Funds Needed as a plug item. If the company had forecast its…

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Q: The Solar Utility company has a projected a capital budget of $5 million for 2020. Thecapital…

A: The before-tax cost of debt is 9.03%.The after-tax cost of debt is calculated below:

Q: Tong foong Co. Ltd has decided that its capital budget during the coming year will be $20 million…

A: Answer - Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: Rain company whose tax rate is 40% has a total asset of P500,000,000 and earnings before interest…

A: Earnings before interest and taxes: Earnings before interest, depreciation and taxes are the…

Q: Harvey's Industrial Plumbing Supply's target capital structure consists of 40% debt and 60% equity.…

A: Residual Dividend Approach: In this approach, The companies first utilize the net income to for new…

Q: Buena Terra Corporation is reviewing its capital budget forthe upcoming year. It has paid a $3.00…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Suppose Firm A plans to retain $100 million of earnings for the year. It wants tofinance its capital…

A: Computation:

Q: Strategic Systems Inc. expects to have net income of P800,000 during the next year. Its target, and…

A: Answer -   If Strategic Systems Inc wants to maintain its current structure, 60% of investments…

Q: The Tortuga Corp has annual credit sales of $2.5 million. Current expenses for the collection…

A:

Q: compute the weighted average cost of capital.

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Q: Hamilton Corporation has a target equity ratio of 65%, andits capital budget is $2 million. If…

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Q: Petersen Company has a capital budget of $1.0 million. The company wants to maintain a target…

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Q: Sheehan Corp. is forecasting an EPS of P3.00 for the coming year on its 400,000 outstanding shares…

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Q: Antonio Melton, the chief executive officer of Thornton Corporation, has assembled his top advisers…

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Q: Conventional Corporation is evaluating a capital budgeting project that will generate $600,000 per…

A: Computation:

Q: Petersen Company has a capital budget of $1.2 million. The company wants to maintain a target…

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A: Maximum Capital Budget = Net income / Equity percentage

Q: Tong Foong Co. Ltd. has decided that its capital budget during the coming year will be $20 million.…

A: Given, Equity % = 60 Debt % = 40 EBIT = $34.667 million Assets = $200 million Average interest rate…

Q: Compute the projected after-tax operating cash flow for Steber during the coming year.

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Q: Altamonte Telecommunications has a target capital structure that consists of 50% debt and 50%…

A:

Q: The projected capital budget of Kandell Corporation is $725,000, its target capital structure is 60%…

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Q: Miler and Boggs Co. has 3 million in total assets, 1.65 million in equity, and a 500,000-capital…

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Q: Mortal Inc. expects to have a capital budget of $575,000 next year. The company wants to maintain a…

A: Note: It is a case where the number of questions asked is more than one and no specified question is…

Q: Driver Corporation has plans calling for a capital budget of $60 million. Its optimal capital…

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Q: A company roll out its capital budget for the coming year at P20,000,000. The optimal capital…

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Q: Steber Packaging, Inc., expects sales next year of $50 million. Of this total, 40 percent is…

A: Operating expenses=$25millionAccelerated Depreciation=10millionMarginal tax rate=34%

Q: Global Harmonic Control Systems (GHCS) forecasts its Revenues, to be $500 million in one year. The…

A: Here, Discount Rate is 16% No. of shares outstanding is 12 million shares All cost are proportional…

Q: The Boyd Corporation has annual credit sales of $1.6 million. Currentexpenses for the collection…

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Q: Strategic Systems, Inc., expects net income of $800,000 for next year. Its target capital structure…

A: NET INCOME IS 800,000

Q: Compute the projected after-tax operating cash flow for Steber during the coming year. E

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Q: MJI Shippers has a current and target capital structure of 35 percent debt and 65 percent equity.…

A: Formula used:

Q: altamonte telecommunications has a target capital structure that consist of 45% debt and 55% equity.…

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Q: Blue Co. has a capital structure that consists of 25% equity and 75% liabilities.  The company…

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.