The financial manager of Federal Financial leasing & investment Ltd has well-structured capital. The company has an 8% Debenture cost of Tk.100000 Tk., a 12% Preference Share cost of BDT 50000. Common Share BDT 120000 and Retained Earning BDT 30000. Other Information: a. The Common Shares of the company sell for TK. 30 each. b. The market price of preference share is Tk. 96 (par value Tk. 100). A flotation cost of 5% of th marketprice would be incurred for the issue of all kinds of share
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- D O Assume that Kish Inc. hired you as a consultant to help estimate its cost of capital. You have obtained the following data: Do = $0.90; Po = $47-50; and g = 7.00% (constant). Based on the DCF approach, what is the cost of equity from retained earnings? Do not round your intermediate calculations. a. 2.03% b. 8.77% O c. 9.03% O d. 8.89% O e. 2.17% Q Search B G 8 40 E hp X Dropbox promotion fo 25 alt a W ctri *** prisc X delete backspace pause homeQuestion 2 The following information relates to A Ltd and B Ltd Two companies which operate in the same industry and listed on the stock markets. All figures are in Ghana Cedis Summarized Profit and Loss Account A. Ltd. 80,000 B Ltd Operating profit 80,000 Interest paid 10,000 40,000 Profit after interest 70,000 Dividend paid 20,000 40,000 25,000 Retained Profit 15.000 50.000 Summarized Balance Sheet A Ltd. B Ltd Total Assets less Current liabilities 600,000 600,000 Financed by: Ghc 1.00 Ordinary shares 100,000 100,000 Reserves 100,000 400,000 10% Unsecured Loan stock 400.000 100.000 600.000 600.000The following information is available in respect of a firm: Capitalization Rate : 10% Earnings per Share : Rs. 50 Assume rate of return on investments : ja. 12% b. 8% c. 10% Show the effect of dividend policy on market price of shares applying Walter's formula when dividend pay-out ratio is : a. 0% b. 20% c. 40% d. 80% e. 100%
- QUESTION EIGHTA firm has Sh. 4 million of 7.5 % interest rate debt. Its expected EBIT is Sh. 0.9 million and WACC is 10 %. Using the Net Operating Income approach;(i) Calculate the value of the firm(ii) Calculate the cost of capital for the firmQUESTION NINEConsider two firms L and U which are identical in all aspects except for capital structure. The EBIT and cost of capital for each firm is Sh. 900,000 and 10% respectively. U is an all-equity financed firm while L has 7.5% of Sh.4, 000,000 debt.a. Estimate the value of levered firm (L) and Unlevered firm (U) using Net Income (NI) approach;b. Establish whether there is an arbitrage opportunityc. Estimate the arbitrage profits if any by considering an investor who holds 10% of the stock ofThe company capital structure consists of debt 250000 at 0.063, preferred stock 230000 at 11% and common stock 120000 at 14%, calculate company's weighted average cost of capital Select one: O a. 0.0683 O b. 0.0963 O.0.0262 O d. All the given choices are not correct O e. 0.0542A) The factors on which capital structure is dependent on Select one: a. Government Policy b. Cost of capital c. Requirement of investors d. All the options B) If Dhofar Popcorn is issuing preferred stock at OMR 95 per share, with a stated dividend of OMR 15, and a flotation cost of 2.15%, then what is the cost of preferred stock? Select one: a. 15.13% b. 10% c. 16.13% d. 15% e. None
- Assume Skyler Industries has debt of $4,500,000 with a cost of capital of 7.5% and equity of $5,500,000 with a cost of capital of 10.5%. What is Skylers weighted average cost of capital?The company capital structure consists of debt 250000 at 0.076, preferred stock 230000 at 11% and common stock 120000 at 14%, calculate company's weighted average cost of capital Select one: O a. 0.0737 O b. All the given choices are not correct O c. 0.0316 O d. 0.0596 O e. 0.1017Assume you are given the following information for firms A and B: A В $1,563,400.00 $2,357,316.00 $2,051,347.00 $1,257,431.00 Price $31.25 $31.25 i 13.52% 13.52% EBIT $97,347.00 $97,347.00 No taxes How do you replicate an investment in 79% of stock B by using stock A? What is the return of the replicating strategy?
- a. All future prices and future dividends are expected values OTrue OFalse b. Shareholders elect: Cofficers OManagers ODirectors Oinvestors c. If Do= $2and dividends are expected to grow at a rate g = 5% then D7 !! O$2.68 OS2.1 O$1.39 O$2.81 d. The market price of a share is always equal to the estimated price of a share. OTrue OFalse e. A share with voting rights is more valuable than a share without voting rights OTrue OFalse Give your reasonsPara Inc is trading at a forward (EV/FCFF1) Ratio of 20, a forward (EV/ (EBIT1 (1-Tc)) ratio of 10 and (EV/ Capital) ratio of 2. Based on the information, answe the following A. Para Inc. Return on capital equal to ? B. Para Inc. Growth rate equal to ? C. Weighted average cost of capital equal to?3. A property holdings declared a dividend of P9 per share for the common stock. If the common stock closes at P76, how large is the stock yield ratio on this investment? a. 27. 17% c. 11.04% b. 27. 07% d. 11.84%