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EBIT and Contribution Margin
Firm A has $10,000 in assets entirely financed with equity. Firm B also
has $10,000 in assets, but these assets are financed by $5,000 in debt
(with a 10 percent rate of interest) and $5,000 in equity.
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ROE and Leverage - Money, Inc.
Repeat part (a) assuming the firm goes trough with the proposed recapitalization.
Under the recapitalization, equity will reduce by 60,000 and the new equity value = 150,000-60,000=90,000. There will be interest expense of 60,000X5%=3,000.
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Common-size percentage for net income
535966 Common-Size Percentage for Net Income Foreign Travel Services has net income of $48,400, total assets of $219,000, total equity of $154,800, and total sales of $311,700. What is the common-size percentage for the net income?
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Financial leverage affects both EPS and EBIT
As a general rule, the capital structure that maximizes firm value, or stock price also
a. mximizes the expected rate of return on equity (ROE)
b. maximizes the weighted average cost of capital (WACC)
c. minimizes the weighted average cost of capital
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Percentage of Sales
127424 Using Percentage of Sales Using Percentage of Sales. The 2003 financial statements for Growth Industries are presented below. Sales and costs in 2004 are projected to be 20 percent higher than in 2003.
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Practice Question
The expert computes the rate on equity (ROE) under three different economic scenarios. The percentage of ROE is also calculated.
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Part 2 of General Electric Financial Analysis
D $ 589,190,000,000
E/V = percentage of financing that is equity 0.189258
D/V = percentage of financing that is debt 0.980466
Tc = corporate tax rate 14.3% (http://www.fool.com/investing/general/2012/02/23/corporate-taxes-a-mess-begging-to-be-cleaned-up.aspx
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Cost of Capital for investments/ Required rate of return
The various factors include the cost of equity, cost of debt, the market value obtained from the firm's equity, the market value of the firm's debt, equity percentage, debt percentage, and the rate of corporate tax calculation (Dobbs, Kim & Lund, 2011
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Cost of capital for a firm
143246 Cost of capital for a firm The company cost of capital for a firm with a 60/40 debt/equity split, 8% cost of debt, 15% cost of equity, and a 35% tax rate would be:
A. 7.02%
B. 9.12%
C. 10.80%
D. 13.80%
I am calculating 7.02% but am