Paris Financial Co. recently declared a dividend of €2 per share, but the stock price only dropped by €1.60 cum- date/ex-date. What is the implied tax rate for Paris Financial Co.'s investors?
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Paris Financial Co. recently declared a dividend of €2 per share, but the stock price only dropped by €1.60 cum- date/ex-date. What is the implied tax rate for Paris Financial Co.'s investors?
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- Que Corporation pays a regular dividend of $1 per share. Typically, the stock price drops by $0.80 per share when the stock goes ex-dividend. Suppose the capital gains tax rate is 20%, but investors pay different tax rates on dividends. Absent transactions costs, what is the highest dividend tax rate of an investor who could gain from trading to capture the dividend?The common stock and debt of Northern Sludge are valued at $70 million and $30 million, respectively. Investors currently require a 16.0% return on the common stock and a/an 7.7% return on the debt. If Northern Sludge issues an additional $13 million of common stock and uses this money to retire debt, what happens to the expected return on the stock? Assume that the change in capital structure does not affect the interest rate on Northern’s debt and that there are no taxes. a. What is the new return on equity?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?
- Vhea Corp has an operating profit of P1,200 produced from P9,800 insales. If Vhea has no interest expense and currently pays 35% of itsoperating profits in taxes and P200 per year in preferred dividends, thenwhat is Vhea’s net profit margin? A. 10.20%B. 7.96%C. 7.96%D. 5.92%The common stock and debt of Northern Sludge are valued at $58 million and $42 million, respectively. Investors currently require a 16.9% return on the common stock and a/an 6.8% return on the debt. If Northern Sludge issues an additional $22 million of common stock and uses this money to retire debt, what happens to the expected return on the stock? Assume that the change in capital structure does not affect the interest rate on Northern’s debt and that there are no taxes. (Do not round intermediate calculations. Enter your answer as a percent rounded to two decimal places.)National Co. has a financial break-even point at P260,000. Th company paid an annual interest of P80,000 and has an applicable corporate tax rate of 45%. How much is annual preferred dividends paid by National Co.?
- Blue Company has a financial break-even point at P163,500. How much is the total preferred dividends to be distributed if Blue Company has an annual interest of P63,500, a total of 5,000 preferred shares outstanding and a tax rate of 40%?Suppose the firm makes the change but its competitors react by making similar changes to their own credit terms, with the net result being that gross sales remain at the current 1,000,000 level. What would be the impact on the firms after-tax profitability?Albion Inc. provided the following information for its most recent year of operations. The tax rate is 40%. Required: 1. Compute the following: (a) return on sales, (b) return on assets, (c) return on stockholders equity, (d) earnings per share, (e) price-earnings ratio, (f) dividend yield, and (g) dividend payout ratio. 2. CONCEPTUAL CONNECTION If you were considering purchasing stock in Albion, which of the above ratios would be of most interest to you? Explain.
- The common stock and debt of Northern Sludge are valued at $62 million and $38 million, respectively. Investors currently require a 16.8% return on the common stock and a/an 7.2% return on the debt. If Northern Sludge issues an additional $21 million of common stock and uses this money to retire debt, what happens to the expected return on the stock? Assume that the change in capital structure does not affect the interest rate on Northern’s debt and that there are no taxes. (Do not round intermediate calculations. Enter your answer as a percent rounded to two decimal places.) What is the new return on equity? ____%A firm is making a payment of $1000 to its investors. The firm is in the 35% marginal tax bracket. If this payment is made in the form of dividends to its shareholders, how much does the firm have to have in earnings to be able to make the payment? Round your answer to the nearest dollar. Group of answer choices None of them 1,444 1,350 1,538The common stock and debt of Northern Sludge are valued at $72 million and $12 million, respectively. Investors currently require a 16.4% return on the common stock and/an 7.3% return on the debt. If Northern Sludge issues an additional $12 million of common stock and uses this money to retire debt, what happens to the expected return on the stock? Assume that the change in capital structure does not affect the interest rate on Northern's debt and that there are no taxes. (Do not round intermediate calculations. Enter your answer as a percent rounded to two decimal places.)
