The Simmons Company expects earnings of $30 million next year. Its dividend payout ratio is 40 percent, and its proportion of debt (debt/assets ratio) is 55 percent. Simmons uses no preferred stock. What amount of retained earnings does Simmons expect next year? b. At what amount of financing will there be a break point in the MCC schedule?
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Where does the 60% come from? on part a Step 2?
- Give typing answer with explanation and conclusion Jenkins, Inc., has equity with a market value of $23.5 million and debt with a market value of $11.75 million. The cost of debt is 8 percent per year. Treasury bills that mature in one year yield 4 percent per year, and the expected return on the market portfolio over the next year is 10 percent. The beta of the company’s equity is 1.2. The firm pays no taxes. a. What is the company’s debt-equity ratio? (Do not round) a. Debt-equity ratio b. weighted average cost of capital c. cost of capitalDuring the previous year, Leveraged Inc. paid $119 million of interest expense, and its average rate of interest for the year was 8.0%. The company's ROE is 11.1 %, and it pays no dividends. Estimate next year's interest expense assuming that interest rates will fall by 24% and the company keeps a constant equity multiplier. Question content area bottom Part 1 Next year's estimated interest expense is $___________ enter your response below. (Round to the nearest dollar.)Please answer questions 3/4 PLEASE ! The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 5% per year. Callahan's common stock currently sells for $24.00 per share; its last dividend was $1.80; and it will pay a $1.89 dividend at the end of the current year. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. 12.88 % If the firm's beta is 1.8, the risk-free rate is 4%, and the average return on the market is 14%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. 22 % If the firm's bonds earn a return of 12%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the judgmental risk premium of 4% in your calculations. Round your answer to two decimal places. % 16.96? If you have equal confidence in the inputs used for the three approaches, what is your…
- You've collected the following information about Caccamisse, Incorporated: Sales Net income Dividends Total debt Total equity = a. Sustainable growth rate b. Additional borrowing c. Growth rate = = = = $ 330,000 $ 18,700 $ 7,500 $ 70,000 $ 101,000 a. What is the sustainable growth rate for the company? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. Assuming it grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What growth rate could be supported with no outside financing at all? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. % %You've collected the following information about Caccamisse, Incorporated: Sales Net income Dividends Total debt Total equity = = a. Sustainable growth rate b. Additional borrowing c. Growth rate $ 280,000 $ 17,700 $ 6,500 $ 60,000 $ 91,000 a. What is the sustainable growth rate for the company? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. Assuming it grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What growth rate could be supported with no outside financing at all? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Answer is complete but not entirely correct. 24.14% $ 11,574.00 X 4.00 %Q. 6 High Flyer, Inc., wishes to maintain a growth rate of 14% per year and a debt-equity ratio of 0.5. The profit margin is 4.6%, and total asset turnover is constant at 1.16. What is the dividend payout ratio? (A negative answer should be indicated by a minus sign. DO NOT round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16) What is the maximum sustainable growth rate for this company? (DO NOT round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16)
- Quantitative Problem: Barton Industries expects next year's annual dividend, D1, to be $2.00 and it expects dividends to grow at a constant rate g = 4.9%. The firm's current common stock price, P0, is $23.50. If it needs to issue new common stock, the firm will encounter a 4.9% flotation cost, F. Assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. What is the flotation cost adjustment that must be added to its cost of retained earnings? Do not round intermediate calculations. Round your answer to two decimal places. % What is the cost of new common equity considering the estimate made from the three estimation methodologies? Do not round intermediate calculations. Round your answer to two decimal places. %Wazir Ali Corporation expects next year’s net income to be $15 million. The firm’s debt ratio is currently 35%. Wazir has $12 million of profitable investment opportunities, and it wishes to maintain its existing debt ratio. Required According to the residual distribution model (assuming all payments are in the form of dividends), how large should Wazir’s dividend payout ratio be next year? (solve in excel)Quantitative Problem: Barton Industries expects next year's annual dividend, D1, to be $1.70 and it expects dividends to grow at a constant rate gL = 5%. The firm's current common stock price, P0, is $23.60. If it needs to issue new common stock, the firm will encounter a 5.7% flotation cost, F. Assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. What is the flotation cost adjustment that must be added to its cost of retained earnings? Round your answer to 2 decimal places. Do not round intermediate calculations. % What is the cost of new common equity? Round your answer to 2 decimal places. Do not round intermediate calculations. %
- A4) 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.Company Z-prime's earnings and dividends per share are expected to grow by 3% a year. Its growth will stop after year 4. In year 5 and afterward, it will pay out all earnings as dividends. Assume next year's dividend is $9, the cost of equity is 13%, and next year's EPS is $16. What is Z-prime's stock price? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Stock priceA firmrecently paid a dividend, D0, of $1.25. It expects to have nonconstant growth of 13% for 2 years followed by a constant rate of 8% thereafter. The firm's required return is 18%. What is the firm's horizon, or continuing, value? Do not round intermediate calculations. Round your answer to the nearest cent. What is the firm's intrinsic value today? Do not round intermediate calculations. Round your answer to the nearest cent.