Exercise 10-12 Applying debt-to-equity ratio LO A3 Montclair Company is considering a project that will require a $540,000 loan. It presently has total liabilities of $200,000, and total assets of $640,000. 1. Compute Montclair's (a) present debt-to-equity ratio and (b) the debt-to-equity ratio assuming it borrows $540,000 to fund the project. Choose Numerator: Choose Denominator: Debt-to-Equity Ratio |(a) |(b)
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- Exercise 10-16 (Algo) Applying debt-to-equity ratio LO A2 Montclair Company is considering a project that will require a $620,000 loan. It presently has total liabilities of $160,000 and total assets of $680,000. C raw 1. Compute Montclair's (a) current debt-to-equity ratio and (b) the debt-to-equity ratio assuming it borrows $620,000 to fund the project. 2. If Montclair borrows the funds, does its financing structure become more or less risky? 1. (a) 1. (b) Choose Numerator: 1 1 1 1 Choose Denominator: Debt-to-Equity Ratio If Montclair borrows the funds, does its financing structure become more or less risky? < Prev 5 of 5 MacBook Air NextQuestion 6 XY Company is considering 5 investment projects as follows: Project Investment ($) Profitability index (PI) A 10,000 1.2 B 6,000 1.1 C 18,000 1.6 D 14,000 0.9 E 12,000 1.3 The company has $30,000 available for investment. Projects C and E are mutually exclusive. All projects can be undertaken only once and are not divisible. Required: (ii)Rank the projects PI and NPVQuestion 16 of 30 View Policies Current Attempt in Progress -/0.35 ⠀ Crane Crafts Corp. management is evaluating two independent capital projects that will each cost the company $200,000. The two projects will provide the following cash flows: Year Project A Project B 1 $66,750 $26,450 2 93,450 66,125 3 34,235 143,250 4 151,655 98,110 (a1) What is the payback period of both projects? (Round answers to 2 decimal places, e.g. 15.25.) The Payback of Project A is years and Project B is eTextbook and Media Save for Later Using multiple attempts will impact your score. 20% score reduction after attempt 2 years. Attempts: 0 of 3 used Submit Answer (a2) The parts of this question must be completed in order. This part will be available when you complete the part above. Search ♡
- Q No. 1 Assume that you are given assignment to evaluate the capital budgeting projects of the company which is considering investing in two Solar Energy projects, "Jamper Solar Project" and "Sajawal Solar Project". The initial cost of each project is Rs. 10000 Million. Company discount all projects based on WACC. Further, all the projects are equally risky projects, and the company uses only debt and common equity for financing these projects. It can borrow unlimited amounts at interest rate of rd 10% as long as it finances at its target capital structure, which calls for 50% debt and 50% common equity. The dividend for current period is Rs 7.36, its expected that the dividend will grow at the constant growth rate of 8%, and the company's common stock sells for 80. The tax rate is 50%. The cash flows of both the projects are given in table below: Time Jamper Solar Project Cashflows (amount in Rs. Millions) Sajawal Solar Project Cashflows (amount in Rs. Millions) 10,000 10,000 3,500…Q No. 1 Assume that you are given assignment to evaluate the capital budgeting projects of the company which is considering investing in two Solar Energy projects, “Jamper Solar Project” and “Sajawal Solar Project”. The initial cost of each project is Rs. 10000 Million. Company discount all projects based on WACC. Further, all the projects are equally risky projects, and the company uses only debt and common equity for financing these projects. It can borrow unlimited amounts at interest rate of rd 10% as long as it finances at its target capital structure, which calls for 50% debt and 50% common equity. The dividend for current period is Rs 7.36, its expected that the dividend will grow at the constant growth rate of 8%, and the company’s common stock sells for 80. The tax rate is 50%. The cash flows of both the projects are given in table below: Time Jamper Solar Project Cashflows (amount in Rs. Millions) Sajawal Solar Project Cashflows (amount in Rs. Millions) 0…Problem 9 Intro Apollo Learnings needs $39 million to build a new campus. The company has a target debt-equity ratio of 1. The flotation cost for new equity is 9% and the flotation cost for new debt is 4%. Part 1 What are the weighted average flotation costs as a fraction of the amount invested? 4+ decimals Submit Part 2 What is the true cost of building the new campus (in $ million)? 1+ decimals Submit
- Q No. 1 Assume that you are given assignment to evaluate the capital budgeting projects of the company which is considering investing in two Solar Energy projects, “Jamper Solar Project” and “Sajawal Solar Project”. The initial cost of each project is Rs. 10000 Million. Company discount all projects based on WACC. Further, all the projects are equally risky projects, and the company uses only debt and common equity for financing these projects. It can borrow unlimited amounts at interest rate of rd 10% as long as it finances at its target capital structure, which calls for 50% debt and 50% common equity. The dividend for current period is Rs 7.36, its expected that the dividend will grow at the constant growth rate of 8%, and the company’s common stock sells for 80. The tax rate is 50%. The cash flows of both the projects are given in table below: Time Jamper Solar Project Cashflows (amount in Rs. Millions) Sajawal Solar Project Cashflows (amount in Rs. Millions) 0…Q.No.2 Three independent projects, each of which requires a RS 5 million investment are being considered for investment purpose by Sona Tea Company. The cost of capital and estimated internal rate of return (IRR) for these projects are shown below: Project Cost of capital IRR A 16% 20% B 12% 10% C 8% 9% Company’s capital structure involves only debt and equity financing with the ratio of 50% each. The estimated net income from the selected projects is expected to be RS 7,287,500. What should be the dividend payout ratio If Sona tea company estimate its dividends based on the residual dividend model?Q No. 1 Assume that you are given assignment to evaluate the capital budgeting projects of the company which is considering investing in two Solar Energy projects, “Jamper Solar Project” and “Sajawal Solar Project”. The initial cost of each project is Rs. 10000 Million. Company discount all projects based on WACC. Further, all the projects are equally risky projects, and the company uses only debt and common equity for financing these projects. It can borrow unlimited amounts at interest rate of rd 10% as long as it finances at its target capital structure, which calls for 50% debt and 50% common equity. The dividend for current period is Rs 7.36, its expected that the dividend will grow at the constant growth rate of 8%, and the company’s common stock sells for 80. The tax rate is 50%. The cash flows of both the projects are given in table below: Time Jamper Solar Project Cashflows (amount in Rs. Millions) Sajawal Solar Project Cashflows (amount in Rs. Millions) 0…
- QUESTION 12 The cost of capital for 3M is 8.85% and it currently has $400 million in debt and $1,600 million in equity outstanding. Assume 3M wants to raise an additional $240 to fund a new project. Which of the following statements is most accurate? In order to maintain the current cost of capital, 3M should raise this capital by O Borrowing $60 million and raising equity of $180 million O Any combination of debt and equity O Borrowing $48 million and raising equity of $192 million O Borrowing $180 million and raising equity of $60 million O Borrowing $192 million and raising equity of $48 millionProblem 2 ABM Enterprise would like to evaluate/analyze an investment proposal. Given the following: Investment amount 450,000 (2022) Dividends / Revenue stream - 100,000 for the first year and an interval of 5,000 for the succeeding years Discount rate - 14% a. NPV for the perio 2023 through 2029; b. Total NPV using manual computation; c. Total NPV using the Excel function; and d. IRR rate.Assignment: Chapter 11 Cost of Capital Attempts 2. An overview of a firm's cost of debt Keep the Highest/3 To calculate the after-tax cost of debt, multiply the before-tax cost of debt by Three Waters Company (TWC) can borrow funds at an interest rate of 12.50% (2+T)od of four years. Its marginal federal-plus-state tax rate is 40%. TWC's after-tax cost of debt is (rounded to two decimal(1-T) At the present time, Three Waters Company (TWC) has 10-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,278.41 per bond, carry a coupon rate of 11%, and distribute annual coupon payments. The company incurs a federal- plus-state tax rate of 40%. If TWC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to tw decimal places)? O4.22% O 3.80 % O 5.06% 4.85%