Question: Leverage Indifference. Top Corp. is considering a restructuring. Currently, it is all-equity financed with 6,250,000 ordinary shares outstanding traded at $46 per share on the

Leverage Indifference. Top Corp. is considering a restructuring. Currently, it is all-equity financed with 6,250,000 ordinary shares outstanding traded at $46 per share on the market. It is planning to borrow $10,000,000 at an annual interest rate of 11% to buy back some of its shares. Top has a tax rate of 39% a. The leverage-indifference EBIT is S Number Round your answer to the dollar b. The leverage-indifference EPS is $ Number Round your answer to the cent Accounts receivables. A firm has credit sales of $178,000 yearly with credit terms 35 days that is also the average collection period and no discount for early payment. Now it considers new trade terms of 2/13 net 35 days. The firm finances short-term assets at the bank at a cost of 10.5 percent annually. a. What is the receivables turnover? Number Round your answer to integer value b. What would be the incremental decrease in account receivables if the new trade terms are accepted by all customers? s Number Round your answer to two decimals c. What is the opportunity cost of funds? $ Number Round your answer to two decimals

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!