Ki (before tax) (%) Nil b. Given (i) the EBIT of Tk. 2,00,000, (ii) the corporate...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Ki (before tax) (%) Nil b. Given (i) the EBIT of Tk. 2,00,000, (ii) the corporate tax rate of 35 percent, and (iii) the following data, determine the amount of debt that should be used by the firm in its capital structure to maximize the value of the firm. Debt Nil 6 Ke (%) 12.0 TK1,00,000 10.0 12.0 2,00,000 10.5 12.6 3,00,000 11.0 13.0 4,00,000 12.0 13.6 5,00,000 14.0 15.6 6,00,000 17.0 20.0 C. In considering the most desirable capital structure of a company the following data have been collected by the finance manager of the company from the capital market: 5 Debt as % of Cost of debt total capital (In %) Cost of equity (In %) 0 5.0 SAP 12.0 10 5.0 12 1+0.18 20 5.0 12.5 30 5.5 13.0 40 6.0 14.0 50 6.5 16.0 60 7.0 20.0 You are required to determine the optimal debt-equity mix for the company by computing F the composite cost of capital. J Ki (before tax) (%) Nil b. Given (i) the EBIT of Tk. 2,00,000, (ii) the corporate tax rate of 35 percent, and (iii) the following data, determine the amount of debt that should be used by the firm in its capital structure to maximize the value of the firm. Debt Nil 6 Ke (%) 12.0 TK1,00,000 10.0 12.0 2,00,000 10.5 12.6 3,00,000 11.0 13.0 4,00,000 12.0 13.6 5,00,000 14.0 15.6 6,00,000 17.0 20.0 C. In considering the most desirable capital structure of a company the following data have been collected by the finance manager of the company from the capital market: 5 Debt as % of Cost of debt total capital (In %) Cost of equity (In %) 0 5.0 SAP 12.0 10 5.0 12 1+0.18 20 5.0 12.5 30 5.5 13.0 40 6.0 14.0 50 6.5 16.0 60 7.0 20.0 You are required to determine the optimal debt-equity mix for the company by computing F the composite cost of capital. J
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
The risk - free rate is 2 . 0 8 % and the market risk premium is 8 . 6 7 % . A stock with a \ beta of 1 . 1 5 just paid a dividend of $ 1 . 0 0 . The dividend is expected to grow at 2 1 . 7 6 % for...
-
Consider the following information: Rate of Return if State Occurs State of Economy Boom :57 Bust of Economy .66 .34 Probability of State Stock A .09 .13 Stock B Stock C .03 .19 .24 -.04 a. What is...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
Adrian Webb bought 618 bricks to build a barbecue pit, paying $185.40. Find the cost per brick. (HINT: Cost per brick means the cost for one brick.) The cost per brick is s (Round to nearest hundidth)
-
Why is syntrophy also called "interspecies H2 transfer"?
-
On December 11, 2007, the Hooper Bank loans a customer $12,000 on a 60-day, 12% note. Required Prepare the journal entries necessary to record the receipt of the note by Hooper, the accrual of...
-
Roberta Wagner owns Wagner Books. At the end of each month, Wagner Books borrows money from a bank and uses the proceeds to pay all of its outstanding accounts payable. The business signs a 15-day,...
-
The Akinnuoye Store is located in midtown Madison. During the past several years, net income has been declining because of suburban shopping centers. At the end of the company?s fiscal year on...
-
C Faw 6 points 80 Exercise 11-3 (Algo) Transfer Pricing Basics [LO11-3] Sako Company's Audio Division produces a speaker used by manufacturers of various audio products. Sales and cost data on the...
-
Trying to create for Nissan with a family demographic and A customer of Nissan are middle-income group individuals in the age group of 25- 45 years who are looking for a family vehicle. My hypothesis...
-
How does retargeting work both from the perspective of the customer as well as the marketing professional.
-
A spaceship is moving from the ground to the moon along the line between the centers of the earth and the moon. At what distance from the earth does the gravitational force become zero? Ma = 7 . 3 6...
-
Solve the formula 8 x 3 y = - 1 9 for y .
-
Explain : An office building is renting for $10/sf, with 50,000 total leasable square feet. Office buildings in the area are selling for cap rates of 5.5%. What information do you have and what are...
-
You are a manager at Percolated Fiber, which is considering expanding its operations in synthetic fiber manufacturing. Your boss comes into your office, drops a consultant's report on your desk, and...
-
Which one of the following conditions is most likely to denature an enzyme? a. None of the other choices is valid O b. Low temperature O c. Moderate pH d. High temperature
-
Hotel Majestic is interested in estimating fixed and variable costs so that the company can make more accurate projections of costs and profit. The hotel is in a resort area that is particularly busy...
-
Berton Inc. is a large, decentralized electronics firm. Berton uses a multiple criteria performance evaluation system in measuring the achievements of its divisions. The criteria used to evaluate...
-
Segment Income Statement-Caprice Company manufactures and sells two products: a small portable office file cabinet that it has made for over 15 years and a home/ travel file introduced more recently....
-
The Texon Co. is organized into autonomous divisions along regional market lines. Each division manager is responsible for sales, cost of operations, acquisition and financing of divisional assets...
Study smarter with the SolutionInn App