Aide Ltd company has an all equity capital structure of 50,000 shares with a current share...

Aide Ltd company has an all equity capital structure of 50,000 shares with a current share price of $5. The company wishes to raise $250,000 at the current share price of $5 per share or borrow the $250,000 at a cost of 5%. What is the EBIT-EPS indifference point of these two plans? The relevant tax rate is 30%

Expert Solution

jeff jeffy answered 2 years ago

Jipange Ltd has a share capital of Ksh 50,000. The membership of the Company has reduced...

Jipange Ltd has a share capital of Ksh 50,000. The membership of the Company has reduced from forty Five members (45) to One(1) member. The register of members was not properly kept. The directors of Jipange Ltd have sought your advice regarding the maintenance of Company Register of members. Outline four particulars which might have been contained in Jipange Ltd former register of members. Indicate the contents of Jipange Ltd current register of members.

The Capital structure of ABC Ltd, is as under: Equity share capital ₹ 100 Lacs 10%...

The Capital structure of ABC Ltd, is as under: Equity share capital ₹ 100 Lacs 10% Debentures ₹ 50 Lacs The sales for the year 2019 are 1.5 Lac units@ ₹ 40per unit  Also, the variable cost per unit is 20 % of sales revenue  ₹ 12 Lacs is the fixed operating cost.  Assume Income tax rate as 40 % Calculate Operating, Financial and Combined Leverage of the firm and interpret the result.

Crown Ltd has the following book value capital structure. Equity capital (shares of Rs 10 par...

Crown Ltd has the following book value capital structure. Equity capital (shares of Rs 10 par value each) Rs 15 crore, 12% Preference capital (Rs 100 par value each) Rs 1 crore. Retained earnings Rs 20 crore, 11.5% Debentures (Rs 100 par value each) 10 crore and 11% Term loan Rs 12.5 crore. The next year expected dividend on equity is Rs 3.6 per share and has an expected growth rate of 7%. The market value is Rs 40/share. Preference...

RON Ltd has the following capital structure components: Five million shares issued with a current market...

RON Ltd has the following capital structure components: Five million shares issued with a current market price of 7. Equity holders require a 9% return. $10 million face value of Corporate bonds outstanding. These bonds pay an annual coupon of 6% and currently trade at a yield to maturity of 6%. If the firm faces a corporate tax rate of 30%, compute RON Ltd's Weighted Average Cost of Capital (WACC). Enter your answer in decimal form to FOUR decimal places....

A company has the following capital structure. 50,000 shares of common stocks outstanding, trading at Pcs,0...

A company has the following capital structure. 50,000 shares of common stocks outstanding, trading at Pcs,0 =$10 per share. The company’s period 0 dividend per share is 0.5 dollars and is expected to grow by 10% per year. 20,000 shares of preferred stocks trading at Pps,0 =$5 per share, that pays a 0.5 dollar dividend per share. The company also sold a 20-year non-amortized corporate bond worth 1 million at par in period 0, with a yield to maturity (YTM)...

(A) A company has a capital structure comprising 5 million issued shares with a current market...

(A) A company has a capital structure comprising 5 million issued shares with a current market price of $10 per share. Expected profit is $6 million, all of which will be paid out as dividends. The company has no debt and pays no tax on its profits. (i) Under the present capital structure, what is the market value of the firm? (1 mark) (ii) What is the rate of return (% pa) on the company’s equity capital?...

Company Alpha Trading Ltd. has a share capital of 2,000 shares, issued at the par value...

Company Alpha Trading Ltd. has a share capital of 2,000 shares, issued at the par value of 100 RON/share. In September N the company issues another 1,000 shares at 150 RON/share. On 30th September N all the shares were subscribed but contribution has not yet been paid. On 31st of October N, the shareholder paid the contribution. Which of the following is correct? Choose one On 31.10.N cash decreases with 100,000 RON On 31.10.N the shareholders’ receivable increases with 150,000...

Peninsula Technology Corporation (PTC) has an all-common-equity capital structure. It has 200,000 shares of $2 par...

Peninsula Technology Corporation (PTC) has an all-common-equity capital structure. It has 200,000 shares of $2 par value common stock outstanding. When PTC's founder, who was also its research director and most successful inventor, retired unexpectedly to the South Pacific in late 2015, PTC was left suddenly and permanently with materially lower growth expectations and relatively few attractive new investment opportunities. Unfortunately, there was no way to replace the founder's contributions to the firm. Previously, PTC found it necessary to plow...

Donaldsen International is an all-equity firm with a current share price of $12.50 and 10,000 shares...

Donaldsen International is an all-equity firm with a current share price of $12.50 and 10,000 shares outstanding. Management is considering issuing $50,000 of debt at an interest rate of 6.5 percent and using the proceeds to repurchase shares. It is felt that the company will have earnings before interest and taxes (EBIT) of $30,000. The company tax rate is 30%. What will the earnings per share (EPS) be if the debt is issued? You are comparing two financial policies. The...

a. An all-equity company ABC has nine million outstanding shares, with a share price currently at...

a. An all-equity company ABC has nine million outstanding shares, with a share price currently at £55. The company also has outstanding debt valued at £75 million. Equity cost of capital is 6.5%. The company has made an announcement of issuing new debt valued at £210 million. The proceeds of this issue will be used to repay outstanding debt and to pay out an immediate dividend. Assume capital markets are perfect. Required: i. What is the share price just after...

Question