f Average assets and capital are 900,000 and 540,000, respectively, with an ROE of 0.046, how much is the net income before tax of the company? Assume 20% corporate tax. All the options have equal benefits. No peso sign, with comma, two decimal points.
Q: What are the signals of the financial distress that we can look for in the Annual Comprehensive Fina...
A: Financial distress is a condition in which a company or individual is unable to generate sufficient ...
Q: According to MM propositions, which of the following statements best describes the consequence of de...
A: The M&M Theorem, or the Modigliani-Miller Theorem is a capital structure theory developed by Mod...
Q: Consider a bond with a coupon of 5.8 percent, eleven years to maturity, and a current price of $1,06...
A: Yield to maturity (YTM) is the total return expected on the bond if the bold is held till maturity. ...
Q: Which of the following statements is CORRECT? Assume that the project being considered has normal ca...
A: WACC is the required rate of return, where as IRR is the actual rate of return of the project. NPV i...
Q: Ann got a 30 year Fully Amortizing FRM for $1,000,000 at an annual interest rate of 6% compounded mo...
A: Here, Fully Amortizing FRM = $1,000,000 Annual interest rate = 6% compounded monthly Refinancing cos...
Q: or an investor who plans to purchase a bond that matures in one year, the primary concern should be ...
A: Step 1You obtain the face amount of the bond and any interests that have accumulated since the last ...
Q: If you invest your P3,000 every year at 4% interest rate, how many months does it take to be worth P...
A: Future Value: The future value is the amount that will be received at the end of a certain period. T...
Q: Ronda wants to buy a new house. She makes S200,000 per year at her job and can put S70.000 a year in...
A: Return on investment or ROI is referred as the performance measurement, which helps in evaluating th...
Q: Suppose a team operates in a stadium with 75,000 capacity and currently charges $85 per ticket, and ...
A: Annuity Annuity is a series of equal payment at equal interval for a specific period of time. With a...
Q: (a) (Write the parameters you use in TVM-Solver.) What quarterly payment will Mike be required to ma...
A: Loan amortization refers to a schedule which is prepared to shows the periodic loan payments, amount...
Q: Jim has an annual income of $300,000. Jim is looking to buy a house with monthly property taxes of $...
A: Let the monthly mortgage = X Monthly property tax = $1200 Monthly homeowner's insurance = $300 Month...
Q: Growing linearly, the balance owed on your credit card doubles from $700 to $1400 in 6 months, If th...
A: Time value of money (TVM) is used to measure the value of money at different point of time in the fu...
Q: A bond will sell at ____________ if the required return is greater than the coupon rate. Select one...
A: Required return relation with price and coupon rate If required return is greater than coupon rate t...
Q: Cost of common stock equity-CAPM Netflix commor stock has a beta, b, of 1.4. The risk-free rate is 9...
A: We need to use CAPM equation to calculate cost of equity or required rate of return. Re =Rf +β*(Rm-...
Q: We are considering the purchase of a $760,000 computed based inventory management system. It is in c...
A: Given in this question , Purchase = $760,000 CCA rate = 30 % Tax rate = 28%. The required return =1...
Q: P8-1 Expected Return Given these three economic states, their likelihoods, ane potential returns, co...
A: Expected return is average return considering the different probabilities of different returns.
Q: Edward Corporation expects an EBIT of $40,000 every year forever. The company currently has no debt ...
A: EBIT is $40,000 Cost of equity is 15% Tax rate is 30%
Q: Price Forward Dividend 1T Target Est $86.36 $2.08 $105.28 Given the information in the table, if the...
A: Given Forward dividend = $2.08 1T Target Est = $105.28 Required return = 11.5%
Q: Big Rock has several investment portfolios with a local mutual fund company. One of the company's di...
A: Risk and return are the two different factors of an investment. Different investors have different l...
Q: plockchain financial transactions?
A: Blockchain helps in making transparency in the financing industry while users are considering the pu...
Q: A few years ago, Big Rock invested in a number of bonds with various maturity dates. Several of thes...
A: Explanation to Bonds Bonds are referred to as fixed-income securities issued by governments and corp...
Q: /hich of the following statements most accurately characterizes the pecking order theory of capital ...
A: The pecking order theory of capital structure is an important theory of capital structure. The theor...
Q: Lupé made a down payment of $5000 toward the purchase of a new car. To pay the balance of the purcha...
A: Present Value can be calculated using PV function in excel PV (rate, nper, pmt, [Fv], [type]) Rat...
Q: Daisy invested 37000 Australian dollars (AUD) in a fixed deposit account with an annual a) 37000 x (...
A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first ...
Q: he zero-growth model of stock valuation; a. implies a zero growth in stock price over time b. impl...
A: Zero growth model of stock valuation assume that the firm will pay the same dividend forever. There ...
Q: The current spot price for one ounce of gold is 1,238.74. Company A and Company B enter into two for...
A: Spot and Forward rates: The spot rate of a commodity is the rate at which the commodity can be bough...
Q: A company expects EPS to be $8.81 next year. The industry average P/E ratio is 34.84 and Enterprise ...
A: The method of comparables means the relevant ratios of industry, peer groups or similar kind of comp...
Q: Holly Homeowner bought a bungalow for $50,000 twenty years ago with a $20,000 down payment. The mont...
A: Annual effective percentage rate is the actual annual return earned by an investor on the asset sold...
Q: A stock currently pays a $3 dividend out of $9 of earnings (EPS). If earnings (EPS) are expected to ...
A: Dividend is the return that a shareholder gets from investing the money in the shares of the company...
Q: Carnes Cosmetics just paid a $5 dividend. Company sales are falling, as the industry is slowly decli...
A: Share price Share price is the current market price of the share. It is the price of the share at wh...
Q: Macrohard Software is considering a new project whose data are shown below. The equipment that would...
A: Operating cash flow means the total amount of cash flow generated by the company from its business o...
Q: LO 1 8.3 Payback Period Concerning payback: Describe how the payback period is calculated and descri...
A: Cash flow statement is referred as the summarized cash and cash equivalents amount that enters as we...
Q: The Nifty is currently trading at 16500 which implies a one year forward P/E multiple of 18x. Assume...
A: Given, current price of market is 16500 PE multiple is 18. ROE is 30% and g is 6% Risk free rate is ...
Q: Assess the use of interest rate options, including swap options
A: Options are referred as the financial derivatives, which used to giver the purchasers the right, but...
Q: How to calculate the accrued interest for a 1000 par bond if the next coupon is payable in 74 days a...
A: Accrued interest refers to the interest amount that shall be paid by investor for purchasing the bod...
Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery w...
A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first ...
Q: Krell Industries has a share price of $21.88 today. If Krell is expected to pay a dividend of $1.1...
A: The stock price which is the maximum price to be paid for share consists of dividends and terminal v...
Q: Ann got a 30 year Fully Amortizing FRM for $1,000,000 at an annual interest rate of 6% compounded mo...
A: it is given that Loan amount - $ 1,000,000 Interest – 6% Payment frequency – 12 – monthly Time – 30 ...
Q: Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Ye...
A: a) NPV=? When r =8% Year Cashflow ($) PVIF @8% PV= Cashflows*PVIF 0 -37000000 1 -37000000 1 5...
Q: Commercial banks are often restricted by Central banks to hold sufficient capital. Why is such a res...
A: A commercial bank may be a financial institution that accepts deposits, provides bank account servic...
Q: Bond J has a coupon of 6.4 percent. Bond K has a coupon of 10.4 percent. Both bonds have 20 years to...
A: Here,
Q: If you invest your P3,000 every year at 4% interest rate, how many months does it take to be worth P...
A: Annual investment (A) = P 3000 r = 4% n = Years to accumulate P 117247.80
Q: A government bond pays coupons at an annual rate of 6%. It has a nominal value of K100 and it will b...
A: Dirty price of a bond The bond price is called dirty price when it included the accrued interest. Ac...
Q: Mr. Sanchez's new machine has been installed. Based on the contract and warranty, there will be no m...
A: Here, Life of Machine is 16 years Maintenance Cost for first 2 years is $0 Maintenance Cost from 3rd...
Q: Suppose that you have good credit and can get a 30-year mortage for $100,000 at 5%. What is your mon...
A: A mortgage is a loan made usually for a property in which the collateral is the property itself.
Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery w...
A: Cost of equity can be calculated by using this equation Cost of equity =(Dividend/current stock pric...
Q: Your parents can take out a federal Direct Plus loan to pay for the total remaining cost of your und...
A: Given: Simple interest rate = 6.84% Years =10 graduation on June 1st Loan taken date = 1st September...
Q: Duration is a measurement of a bond’s interest rate risk. It is also referred to as the responsivene...
A: Bond duration or duration of the bond means the price sensitivity of the bond when the interest rate...
Q: Define the principles of tapering rates, blanket rates, and commercial zones and the implication of ...
A: The growth of the global economy was aided by international trade. Global events affect and influenc...
Q: Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year ...
A: Honor Code: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answ...
If Average assets and capital are 900,000 and 540,000, respectively, with an
No peso sign, with comma, two decimal points.
Step by step
Solved in 2 steps
- Answer the following questions based on the information in the table. Assume a tax rate of 30 percent. For simplicity, assume that the companies have no other liabilities other than the debt shown. (All dollars are in millions.) Earnings before interest and taxes Debt (at 7% interest) Equity a. Calculate each company's ROE, ROA, and ROIC. Note: Round your answers to 1 decimal place. ROE ROA ROIC Atlantic Corporation Pacific Corporation 98.4 % 19.1% 25.0 % 32.1% 24.6% 28.3 % Atlantic Corporation $ 440 $ 290 $ 960 Pacific Corporation $ 520 $ 1,540 $ 370Answer the following questions based on the information in the table. Assume a tax rate of 30 percent. For simplicity, assume that the companies have no other liabilities other than the debt shown. (All dollars are in millions.) \table[[,\table[[Atlantic],[Corporation]],Pacific],[Earnings before interest and taxes,$470,$470Suppose a firm's tax rate is 25%. 1. What effect would a $10.92 million operating expense have on this year's earnings? What effect would it have on next year's earnings? (Select all the choices that apply.) A. $10.92 million operating expense would be immediately expensed, increasing operating expenses by $10.92 million. This would lead to a reduction in taxes of 25%×$10.92 million=$2.73 million. B. A $10.92 million operating expense would be immediately expensed, increasing operating expenses by $10.92 million. This would lead to an increase in taxes of 25%×$10.92 million=$2.73 million C. Earnings would decline by $10.92 million−$2.73 million=$8.19 million. There would be no effect on next year's earnings. D. Earnings would decline by $10.92 million−$2.73 million=$8.19 million. The same effect would be seen on next year's earnings 2. What effect would a $10.25 million capital expense have on this year's earnings if the capital expenditure is depreciated at a rate of $2.05…
- Fujita, Incorporated, has no debt outstanding and a total market value of $450,000. Earnings before interest and taxes, EBIT, are projected to be $57,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 16 percent higher. If there is a recession, then EBIT will be 24 percent lower. The company is considering a $215,000 debt issue with an interest rate of 8 percent. The proceeds will be used to repurchase shares of stock. There are currently 9,000 shares outstanding. Ignore taxes for questions (a) and (b). Assume the company has a market- to-book ratio of 1.0 and the stock price remains constant. a-1. Calculate return on equity (ROE) under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a-2. Calculate the percentage changes in ROE when the economy expands or enters a recession. (A negative answer should be…Suppose a firm’s tax rate is 25%. 1. What effect would a $9.26 million operating expense have on this year's earnings? What effect would it have on next year's earnings? (Select all the choices thatapply.) A. A $9.26 million operating expense would be immediately expensed, increasing operating expenses by $9.26 million. This would lead to a reduction in taxes of 25%×$9.26 million=$2.32 million. B. A $9.26 million operating expense would be immediately expensed, increasing operating expenses by $9.26 million. This would lead to an increase in taxes of 25%×$9.26 million =$2.32 million. C. Earnings would decline by $9.26 million−$2.32 million=$6.94 million. The same effect would be seen on next year's earnings. D. Earnings would decline by $9.26 million−$2.32 million=$6.94 million. There would be no effect on next year's earnings. 2. What effect would a $11.75 million capital expense have on this year's earnings if the capital expenditure is depreciated at a rate of $2.35 million…Assume that a company borrows at a cost of 0.08. Its tax rate is 0.35. What is the minimum after-tax cost of capital for a certain cash flow if a. 100 percent debt is used? b. 100 percent common stock? (assume that the stockholders will accept 0.08)
- Choose the correct letter of answer and provide a solution A firm has profit before tax of P63 million. If the company's times interest covered ratio is 8 times, what is the total interest charge? a. P3 Millionb. P6 Millionc. P9 Milliond. P12 Millione. P15 MillionA4) Finance You estimate that the net income for a company next year is a uniform distribution with a minimum of $106 million and a maximum of $127 million. What is the probability that the company's net income is less than or equal to $117 million? Enter answer in percents, to two decimal places.Problem 16-3 ROE and Leverage [LO1, 2] Fujita, Incorporated, has no debt outstanding and a total market value of $356,900. Earnings before Interest and taxes, EBIT, are projected to be $50,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 16 percent higher. If there is a recession, then EBIT will be 25 percent lower. The company is considering a $180,000 debt Issue with an interest rate of 5 percent. The proceeds will be used to repurchase shares of stock. There are currently 8,300 shares outstanding. Ignore taxes for questions (a) and (b). Assume the company has a market- to-book ratio of 1.0 and the stock price remains constant. a-1. Calculate return on equity (ROE) under each of the three economic scenarios before any debt is issued. (Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a-2. Calculate the percentage changes in ROE when the economy expands or enters a…
- Suppose Tool Corp. is an unleveraged firm. It has an expected EBIT of 67,000 in Perpetuity and a tax rate of 35%. Its cost of equity is 10.25%. What is Tool Corp’s firm value? (SHOW YOUR WORK)Assume the firm has a tax rate of 23 percent. c-1. Calculate return on equity (ROE) under each of the three economic scenarios before any debt is Issued. (Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c-2. Calculate the percentage changes in ROE when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c-3. Calculate the return on equity (ROE) under each of the three economic scenarios assuming the firm goes through with the recapitalization. (Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c-4. Given the recapitalization, calculate the percentage changes in ROE when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round…4. Binford Tools has an expected perpetual EBITDA equal to $67k. Its tax rate is 35%. Binford has $139k in debt at a cost of 6.85%. The unlevered capital cost is 10.25%. What is Binford's total value assuming interest is tax deductible?