Onshore Bank has $39 million in assets, with risk-adjusted assets of $29 million. Core Equity Tier 1 (CET1) capital is $1,350,000, additional Tier I capital is $550,000, and Tier Il capital is $438,000. The current value of the CET1 ratio is 4.66 percent, the Tier I ratio is 6.55 percent, and the total capital ratio is 8.06 percent. Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions. a. The bank issues $2.9 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds, CET1 ratio Tier I ratio Total capital ratio %

Onshore Bank has $39 million in assets, with risk-adjusted assets of $29 million. Core Equity Tier 1 (CET1) capital is $1,350,000, additional Tier I capital is $550,000, and Tier Il capital is $438,000. The current value of the CET1 ratio is 4.66 percent, the Tier I ratio is 6.55 percent, and the total capital ratio is 8.06 percent. Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions. a. The bank issues $2.9 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds, CET1 ratio Tier I ratio Total capital ratio %

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 8P

See similar textbooks

Similar questions

Chasse Building Supply Inc. reported net cash provided by operating activities of $243,000, capital expenditures of $112,900, cash dividends of $35,800, and average maturities of long-term debt over the next 5 years of $122,300. What is Chasses free cash flow and cash flow adequacy ratio? a. $94,300 and 0.77, respectively c. $130,100 and 1.06, respectively b. $94,300 and 0.82, respectively d. $165,900 and 1.36, respectively
A bank has $217 million in assets in the 0 percent risk-weight category. It has $223 million in assets in the 20 percent risk-weight category. It has $189 million in assets in the 50 percent risk-weight category and has $29 million in assets in the 100 percent risk-weight category. This bank has $28 million in Tier 1 capital and $56 million in Tier 2 capital. What is this bank's ratio of Tier 1 capital to total assets? Type your answer as percentage and not as decimal (i.e. 5.2 and not 0.052). Round to the nearest two decimals if needed. Do not type the % symbol.
Njenge Bank has the following balance sheet (in millions) with the risk weights in parentheses. Assets Liabilities and Equity Cash (0%) K20 Deposits K175 OECD Interbank deposits (20%) K25 Subordinated debt (2.5 years) K3 Mortgage loans (50%) K70 Cumulative preferred stock K5 Consumer loans (100%) K70 Equity K2 Total Assets K185 Total Liabilities & Equity K185 In addition, the bank has K30 million in performance-related standby letters of credit (SLCs), and K300 million in six-year interest rate swaps. Credit conversion factors follow: Performance-related standby LCs 50%…
Njenge Bank has the following balance sheet (in millions) with the risk weights in parentheses: Assets Liabilities and Equity          Cash                                      (0%) K20 Deposits                                     K175          OECD Interbank deposits (20%) K25 Subordinated debt (2.5 years) K3          Mortgage loans (50%) K70 Cumulative preferred stock K5          Consumer loans (100%) K70 Equity K2 Total Assets                               K185 Total Liabilities & Equity K185 In addition, the bank has K30 million in performance-related standby letters of credit (SLCs), and K300 million in six-year interest rate swaps.…
Njenge Bank has the following balance sheet (in millions) with the risk weights in parentheses.                  Assets                                                                Liabilities and Equity          Cash                                      (0%) K20            Deposits                                   K175          OECD Interbank deposits (20%) K25            Subordinated debt (2.5 years)     K3          Mortgage loans                  (50%) K70            Cumulative preferred stock        K5          Consumer loans                (100%) K70            Equity                                          K2             Total Assets                               K185                  Total Liabilities & Equity    K185          In addition, the bank has K30 million in performance-related standby letters of credit (SLCs), and K300 million in six-year interest rate swaps. Credit conversion factors follow:          Performance-related standby LCs             50%…
Ohio Quarry Inc. has $10 million in assets. Its expected operating income (EBIT) is $4 million and its income tax rate is 40 percent. If Ohio Quarry finances 20 percent of its total assets with debt capital, the pretax cost of funds is 13 percent. If the company finances 40 percent of its total assets with debt capital, the pretax cost of funds is 18 percent. Round your answers to the questions below to two decimal places. Determine the rate of return on equity (ROE) under the three different capital structures (0, 20, and 40% debt ratios).0% debt ratio:    % 20% debt ratio:    % 40% debt ratio:    % Which capital structure yields the highest expected ROE?-Select-0 percent debt and 100 percent equity20 percent debt and 80 percent equity40 percent debt and 60 percent equityItem 4 yields the highest expected ROE. Determine the ROE under each of the three capital structures (0, 20, and 40% debt ratios) if expected EBIT decreases by 30 percent.0% debt ratio:    % 20% debt ratio:    %…
Assume that the total risk-weighted assets (RWA) for Monash bank is $ 210 billion and the current structure of Monash capital shows Common equity Tier1 $ 3 Billion, Non-cumulative Preference shares $ 5 Billion and Subordinated debt (5 years) $ 8 Billion. Which of the following statements is TRUE? A. None of the listed options is correct B. The bank has enough capital to meet the minimum regulatory capital for common equity Tier 1 (CET1), Tier 1 and total capital. C. The bank has enough capital to meet the minimum regulatory capital for Tier 1 capital only. D. The bank has enough capital to meet the minimum regulatory capital for total regulatory capital only. E. The bank doesn't have enough capital to meet the minimum regulatory capital for common equity Tier 1 (CET1), Tier 1 and total regulatory capital
Ohio Quarry Inc. has $20 million in assets. Its expected operating income (EBIT) is $4 million and its income tax rate is 40 percent. If Ohio Quarry finances 20 percent of its total assets with debt capital, the pretax cost of funds is 10 percent. If the company finances 40 percent of its total assets with debt capital, the pretax cost of funds is 15 percent. Round your answers to the questions below to two decimal places. Determine the rate of return on equity (ROE) under the three different capital structures (0, 20, and 40% debt ratios).0% debt ratio: % 20% debt ratio: % 40% debt ratio: % Which capital structure yields the highest expected ROE? yields the highest expected ROE. Determine the ROE under each of the three capital structures (0, 20, and 40% debt ratios) if expected EBIT decreases by 40 percent.0% debt ratio: % 20% debt ratio: % 40% debt ratio: % Which capital structure yields the highest ROE calculated in part c? yields the highest expected ROE.…
Rhea Company has P9,000 in cash, P11,000 in marketable securities, P26,000 in current receivables, P34,000 in inventories, and P40,000 in current liabilities. The Rhea's quick ratio is closest to * Choices: 1.35. 1.15. 1.73. 2.00.
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 ____ _____ $ _____ _____
Luxembourg Port Co. has assets of €100 million (including €10 million in cash) and debt of €20 million. If the company borrows an additional €10 million to repurchases €20 million of stock, what is the new debt-to-equity ratio?
Edelman Engines has $18 billion in total assets of which cash and equivalents total $80 million. Its balance sheet shows $1.8 billion in current liabilities of which the notes payable balance totals $1.05 billion. The firm also has $9.9 billion in long-term debt and $6.3 billion in common equity. It has 300 million shares of common stock outstanding, and its stock price is $26 per share. The firm's EBITDA totals $1.17 billion. Assume the firm's debt is priced at par, so the market value of its debt equals its book value. What are Edelman's market/book and its EV/EBITDA ratios?