Rain company whose tax rate is 40% has a total asset of P500,000,000 and earnings before interest and taxes of P200,000,000. The company’s target capital structure is 50% debt funded and 50% equity funded. The cost of new and old debt is constant at 8%. Retention ratio is 40%. 1. What is the amount of retained earnings? 2. How much of the total capital budget will be funded by debt?
Rain company whose tax rate is 40% has a total asset of P500,000,000 and earnings before interest and taxes of P200,000,000. The company’s target capital structure is 50% debt funded and 50% equity funded. The cost of new and old debt is constant at 8%. Retention ratio is 40%. 1. What is the amount of retained earnings? 2. How much of the total capital budget will be funded by debt?
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter7: Corporate Valuation And Stock Valuation
Section: Chapter Questions
Problem 1P: Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1...
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Rain company whose tax rate is 40% has a total asset of P500,000,000 and earnings before interest and taxes of P200,000,000. The company’s target capital structure is 50% debt funded and 50% equity funded. The cost of new and old debt is constant at 8%. Retention ratio is 40%.
1. What is the amount of
2. How much of the total capital budget will be funded by debt?
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