pay 10% on its 5 million long-term debt. It has an outstanding total shareholding of 1 million.
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pay 10% on its 5 million long-term debt. It has an outstanding total shareholding of 1 million. In the next capital budgeting cycle, the firm expects to fund a positive NPV project costing 1.2 million according to its current capital structure. All the earnings after financing the projects are paid out as dividends (residual policy)
Required:
a) value of debt
b) value of equity
c) MPS
d) dividend payout ratio
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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