XYZ Ltd., experts a net income of $150,000. The company has 10% of 500,000 debentures. The equity capitalization rate of the company is 10%. (a) Calculate the value of the firm and overall capitalization rate according t the net income approach (ignore income tax). (b) If the debenture debt is increased to $750,000 and interest of debt is change to 9%. What is the value of the firm and overall capitalization rate?
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- The Moore Corporation has operating income (EBIT) of 750,000. The companys depreciation expense is 200,000. Moore is 100% equity financed, and it faces a 40% tax rate. What is the companys net income? What is its net cash flow?IXYZ Ltd., experts a net income of $150,000. The company has 10% 500,000 debentures. The equity capitalization rate of the company is 10%.g(a) Calculate the value of the firm and overall capitalization rate accordint the net income approach (ignore income tax).(b) If the debenture debt is increased to $750,000 and interest of debt inchange to 9%. What is the value of the firm and overall capitalizatiorate?A. ABC Corp., expects a net income of Php. 250,000. The company has 10% of 5,000,000 Debentures. The equity capitalization rate of the company is 10%. 1. Calculate the value of the firm and overall capitalization rate according to the net income approach (ignoring income tax). 2. If the debenture debt is increased to Php. 750,000 and interest of debt is change to 8%. What is the value of the firm and overall capitalization rate?
- PROBLEM A. A. ABC Corp., expects a net income of Php. 250,000. The company has 10% of 5,000,000 Debentures. The equity capitalization rate of the company is 10%. 1. Calculate the value of the firm and overall capitalization rate according to the net income approach (ignoring income tax). 2. If the debenture debt is increased to Php. 750,000 and interest of debt is change to 8%. What is the value of the firm and overall capitalization rate? B. Yuki's projected net operating income of Php. 85,000. It has Php. 3,00,000, 5% debentures. 1. Calculate the value of the firm according to 10 net opening income and overall capitalization rate is 10%. 2. If debenture debt is increased to Php. 100,000. What is the value of the firm and the equity capitalization rate?u are given the following information concerning a firm: sets required for operation: $5,700,000 evenues: $8,600,000 berating expenses: $8,100,000 come tax rate: 40%. anagement faces three possible combinations of financing: 1. 100% equity financing 2. 35% debt financing with a 5% interest rate 3. 70% debt financing with a 5% interest rate a. What is the net income for each combination of debt and equity financing? Round your answers to the nearest dollar. 1 Net income $ 2 3 $ b. What is the return on equity for each combination of debt and equity financing? Round your answers to one decimal place. Return on equity 1 2 3 % % % c. If the interest rate had been 10 percent instead of 5 percent, what would be the return on equity for each combination of debt and equity financing? Round your answers to one decimal place. Return on equity 1 2 3 % % % d. What is the implication of the use of financial leverage when interest rates change? The use of financial leverage is likely to -Select- the…PT. Sentosa Raya uses its own capital and debt capital. The agreed cost of debt is 10% and the interest to be paid on the debt is Rp. 3,000,000. The company earned an operating profit of Rp. 24,000,000 per year. The expected return is 30% per year. With these data, determine the value of the company and the company's cost of capital!
- Referring to table below, calculate the market value of firm L (without a corporate income tax) if the equity amount in its capital structure decreases to $5,000 and the debt amount increases to $5,000. At this capital structure, the cost of equity is 15 percent. Round your answer to the nearest dollar. Firm U Firm L Net operating income (EBIT) $ 1,000 $ 1,000 Less: Interest payments to debt holders, I - 100 Income available to stockholders (dividends), D $ 1,000 $ 900 Total income available to security holders, I + D $ 1,000 $ 1,000 Required rate of return on debt, kd - 5 % Market value of debt, B = I/kd - $ 2,000 Required rate of return on equity,ke 10 % 11.25 % Market value of equity, E = D/ke $ 10,000 $ 8,000 Market value of firm, E + B $ 10,000 $ 10,000 $Lever Age pays a(n) 8% rate of interest on $10.6 million of outstanding debt with face value $10.6 million. The firm’s EBIT was $1.6 million. a. What is times interest earned? (Round your answer to 2 decimal places.) Times interest earned b. If depreciation is $260,000, what is cash coverage? (Round your answer to 2 decimal places.) Cash coverage c. If the firm must retire $360,000 of debt for the sinking fund each year, what is its “fixed-payment cash-coverage ratio” (the ratio of cash flow to interest plus other fixed debt payments)? (Round your answer to 2 decimal places.) Fixed-payment cash-coverage ratioLever Age pays an 10% rate of interest on $10.20 million of outstanding debt with face value $10.2 million. The firm's EBIT was $1.2 million. a. What is its times interest earned? (Round your answer to 2 decimal places.) > Answer is complete but not entirely correct. Times interest earned 0.01 X b. If depreciation is $220,000, what is its cash coverage ratio? (Round your answer to 2 decimal places.) > Answer is complete but not entirely correct. Cash coverage ratio 0.01 X
- Here is Icknield’s market-value balance sheet (figures in $ millions): Net working capital $550 Debt $800 long term assets $2,150 Equity $1,900 value of firm $2,700 $2,700 The debt is yielding 7%, and the cost of equity is 14%. The tax rate is 21%. Investors expect this level of debt to be permanent. a. What is Icknield’s WACC? b. How would the market-value balance sheet change if Icknield retired all its debt?A company Ltd., projected net operating income of $75,000. It has 300,000, 8% debentures. (a) Calculate the value of the firm according to 10 net opening income and overall capitalization rate is 10%. (b) If debenture debt is increased to $ 500,000. What is the value of the firm and equity capitalization rate?Give typing answer with explanation and conclusion A company has an expected EBIT of $18,000 in perpetuity, a tax rate of 35%, and a debt-to- equity ratio of 0.75. The interest rate on the debt is 9.5%. The firm’s WACC is 9%. a) If the company has not debt, what would be the unlevered cost of capital and firm value? b) Suppose now the company has $55,714.29 in outstanding debt. Using your answer to part a) and M&M Proposition I with taxes, what is the value of this levered firm?