Xtal assets of $5,000 and the followingthe coming year:Firm AUnleveredEconomyBadAverageGoodProbability30.00%40.00%30.00%EBIT$500.00$700.00$900.00Interest$0.00$0.00$0.00EBT$500.00$700.00$900.00Taxes (40%)-$200.00-$280.00-$360.00Net Income$300.00$420.00$540.00BEP10.00%14.00%18.00%ROA6.00%8.40%10.80%ROE6.00%8.40%10.80%Now assume that the firm plans to issue $2,000 of debt, at an interest rate of 6.4 percent,and use the proceeds to repurchase equity (you may ignore potential impacts on price andassume that the firm will then have $3,000 of equity). Given this information, determine thestandard deviation of the new ROE distribution.3.487%2.800%2.653%3.098%O 3.774%

Step 1:To find the standard deviation of the new ROE distribution after the firm issues $2,000 of…

Answered: X tal assets of $5,000 and the…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.1.3MBA: Financial leverage MicrosoCortrepotied (MSFT) reported the following data (in millions) for a tern...

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Assume XYZ total assets $1,000,000 and net fixed $600,000. But current liabilities $200,000. Calculate the company current ratio? a. 4x O b. 2x c. 1.5x d. 3x
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Consider the following financial information and answer the questionsthat follow:Sales : $250,000Costs : $134,000Depreciation : $10,200Operating expenses : $6,000Interest expenses : $20,700Taxes : $18,420Dividends : $10,600Addition to Retained Earnings : $50,080Long term debt repaid : $9,300New Equity issued : $8,470New fixed assets acquired : $15,000You are required to:i) Calculate the operating cash flow ii) Calculate the cash flow to creditors iii) Calculate the cash flow to shareholders iv) Calculate the cash flow from assets v) Calculate net capital spending vi) Calculate change in NWC
Consider the following financial information and answer the questionsthat follow:Sales : $250,000Costs : $134,000Depreciation : $10,200Operating expenses : $6,000Interest expenses : $20,700Taxes : $18,420Dividends : $10,600Addition to Retained Earnings : $50,080Long term debt repaid : $9,300New Equity issued : $8,470New fixed assets acquired : $15,000You are required to:iv) Calculate the cash flow from assets v) Calculate net capital spending vi) Calculate change in NWC
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