All earnings generated are paid out as dividends since the product market for its product isstable and
Question:
All earnings generated are paid out as dividends since the product market for its product isstable and expects no growth. The debt consists of perpetual bonds.Required:a) What are Ekovest Bhd's earning per share (EPS) and its price per share?b) Ekovest can increase its debt by RM7 million, to a total of RM11 million, using the newdebt to buy back and retire some of the shares at current price. Its interest rate on debtwill be 11% (it will have to call and refund the old debt), and its cost of new equity will risefrom 14% to 16%. Operating income will remain constant. Should Ekovest change itscapital structure?c) If Ekovest did not have to refund the old debt of RMX million, how would this effect things?
Introduction To Federal Income Taxation In Canada
ISBN: 9781554965021
33rd Edition
Authors: Robert E. Beam, Stanley N. Laiken, James J. Barnett