Question
In: Finance
Consider a company subject to a corporate tax rate of 0.4. Ifthe company has a...
Consider a company subject to a corporate tax rate of 0.4. If the company has a debt ratio of 0.7, and an unleveraged beta of 0.7, what is the company's leveraged beta?
Solutions
Expert Solution
debt ratio=0.7
debt/asset=0.7
1-debt/asset=1-0.7
equity/asset=0.3
so debt to equity (D/E)=0.7/0.3=2.3333
leveraged beta=0.7*(1+(1-0.4)*2.3333)
=1.68
jeff jeffy answered 2 years agoRelated Solutions
Consider a company subject to a corporate tax rate of 0.5. If the company has a...
Consider a company subject to a corporate tax rate of 0.5. If
the company has a debt ratio of 0.6, and an unleveraged beta of
0.5, what is the company's leveraged beta?
What is the subject of Corporate Tax? Who has to pay corporate tax? Please provide detailed...
What is the subject of Corporate Tax? Who has to pay corporate
tax? Please provide detailed information.
Syntonic Limited is an Australian-based company subject to the classical tax system, with a corporate tax...
Syntonic Limited is an Australian-based company subject to the
classical tax system, with a corporate tax rate of 30%.
Historically, the company has been successful with its projects and
currently generating earnings before interest and taxes (EBIT) of
$8 million per year, and this level of earnings is assumed to
continue forever. However, due to increased competition in its
markets, many of its customers are shifting to new service
providers. All of the company’s finance has come from shares issued...
Syntonic Limited is an Australian-based company subject to the classical tax system, with a corporate tax...
Syntonic Limited is an Australian-based company subject to the
classical tax system, with a corporate tax rate of 30%.
Historically, the company has been successful with its projects and
currently generating earnings before interest and taxes (EBIT) of
$8 million per year, and this level of earnings is assumed to
continue forever. However, due to increased competition in its
markets, many of its customers are shifting to new service
providers. All of the company’s finance has come from shares issued...
Consider a company that has a tax rate of 29 percent. The company has an asset...
Consider a company that has a tax rate of 29 percent. The
company has an asset classified as a 3-year asset for tax purposes
yet has a useful life of 5 years. If the asset has an initial cost
of $40,744, what is the depreciation tax shield for the second year
of the asset’s useful life?
Report your answer to the nearest whole dollar (e.g., 123)
A company has $3,000,000 in taxable income. The corporate tax rate is 34%. What is the...
A company has $3,000,000 in taxable income. The corporate tax
rate is 34%. What is the company's net income (or after-tax
earnings)?
An all-equity firm is subject to a 30% corporate tax rate. Its total market value is...
An
all-equity firm is subject to a 30% corporate tax rate. Its total
market value is initially $3,500,000. There are 175000 shares
outstanding. It announces that it will issue $1 million of bonds at
10% interest and uses the proceeds to buy back common stock (Assume
no change in costs of financial distress)
a. what will happen to the market value of equity at the
announcement of the share repurchase?
b. How many shares can the firm buy back with...
Case One (22 pts) Ferengi, Inc. is subject to an applicable corporate tax rate of 21...
Case One (22 pts) Ferengi, Inc. is subject to an applicable
corporate tax rate of 21 percent, and the weighted average cost of
capital (WACC) of 12.5 percent. There is no specific time
constraint on investment project payback requirements.
Q1: Ferengi is currently contemplating two capital investment
plans. Plan A: the upgrade of an information system with an
installed cost of $2,400,000. The upgrade system will be
depreciated straight-line to zero over the project’s five-year
life, at the end of...
The beta of a corporate bond is 0.4. Currently, the risk free rate of interest is...
The beta of a corporate bond is 0.4. Currently, the risk free
rate of interest is 1% and the expected rate of return on the
market portfolio is 8%. The bond is anticipates to pay coupons of
$80 at the end of the year and it has been anticipated that its
price at the end of the year will be $1,020. The current price of
thebond is $1,070.
i. Calculate the required expected rate of return and the actual
rate...
A us corporation is subject to an income tax rate of 35% and has a branch...
A
us corporation is subject to an income tax rate of 35% and has a
branch in the UK which paid the national corporate tax rate of 30%
on its earnings there. The branch generated taxable income from its
operations in UK equivalent to $5,000,000. What is the amount of
taxes owed to the us government on the income generated in the
UK
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- PLEASE DONT FORGET TO SOLVE THE ASSIGNMENT QUESTION MOST IMP: Ex1) Download the code from the...
- Customer is saying website is running slow when his end clients are trying to access the...
- Note: The answers to the following questions should be typed in the block of comments in...
- Python Describe the procedure for setting up the display of an image in a window.
- what are the fundamental similarity and differences between gap and dgap?
- Maria Gonzales is a 57-year-old operating room nurse who works full-time at a local hospital. She...
- Use the bond term's below to answer the question Maturity 7 years Coupon Rate 4% Face...
ADVERTISEMENT