Xavier Corporation predicts that net income in the coming year will be $300 million. There are...

Xavier Corporation predicts that net income in the coming year will be $300 million. There are 30 million shares of common stock outstanding and Xavier maintains a debt to equity ratio of .8. The current market price per share for Xavier is $100.

Required:

If Xavier wishes to maintain its present debt-equity ratio, calculate the maximum investment funds available without issuing new equity and the increase in borrowing that goes along with it. Show Computations
Suppose that the firm uses a residual dividend policy. Planned capital expenditures total $150 million. Based on this information, what will be the dividend yield and the dividend per share? Show computations
Suppose Xavier plans no capital outlays for the coming year. What will be the dividend yield and the dividend per share, assuming that Xavier uses the residual dividend policy? Show Computations

Expert Solution

jeff jeffy answered 2 years ago

Jaime Corporation reported net income of $60 million for last year. Depreciation expense totaled $20 million...

Jaime Corporation reported net income of $60 million for last year. Depreciation expense totaled $20 million and capital expenditures came to $5 million. Free cash flow is expected to grow at a rate of 6% for the foreseeable future. Lambert faces a 30 % tax rate and has a 0.40 debt to equity ratio with $200 million (market value) in debt outstanding. Lambert's equity beta is 1.20, the risk free rate is currently 4% and the market risk premium is...

Without leverage, Impi Corporation will have net income next year of $ 4.5 million. If Impi's...

Without leverage, Impi Corporation will have net income next year of $ 4.5 million. If Impi's corporate tax rate is 21 % and it pays 8 % interest on its debt, how much additional debt can Impi issue this year and still receive the benefit of the interest tax shield next year? (Note: Assume Impi's revenues exceed $ 25 million, and that interest tax deductions are limited to 30 % of EBIT under the TCJA.)

Without leverage, Impi Corporation will have net income next year of $ 8.0 million. If Impi's...

Without leverage, Impi Corporation will have net income next year of $ 8.0 million. If Impi's corporate tax rate is 21 % and it pays 9 % interest on its debt, how much additional debt can Impi issue this year and still receive the benefit of the interest tax shield next year? (Note: Assume Impi's revenues exceed $ 24 million, and that interest tax deductions are limited to 30 % of EBIT under the TCJA.) The debt is $____million.

The following data is for the coming year. FinCorp's Net Income is reported as $195million. Depreciation...

The following data is for the coming year. FinCorp's Net Income is reported as $195million. Depreciation Expense is $20million, accounts receivable decreased by $20 million, accounts payable decreased by $10 million, and inventories increased by $10 million. The firm's interest expense is $22million. Assume the tax rate is 35% and the net debt of the firm increases by $3million. What is the market value of equity if the FCFE is projected to grow at 3% indefinitely and the cost of...

Cullumber Corporation recently reported an EBITDA of $30.70 million and net income of $9.7 million. The...

Cullumber Corporation recently reported an EBITDA of $30.70 million and net income of $9.7 million. The company had $6.8 million in interest expense, and it's average corporate tax rate was 35 percent. What was its depreciation and amortization expense? (Round answer to 2 decimal places and enter your answer in dollars, e.g. 9,700,000.25)

Cox Corporation recently reported an EBITDA of $61 million and $10 million of net income.

Cox Corporation recently reported an EBITDA of $61 million and $10 million of net income. The company has $15 million interest expense and the corporate tax rate is 40.0% percent. What was the company's depreciation and amortization expense? (Answers are in $ millions.)$56.00$46.00$51.00$36.00$29.33

A stock is expected to have net income of $2 per share by the end of the coming year.

A stock is expected to have net income of $2 per share by the end of the coming year. Dividends are expected to grow at a constant rate g per year forever. You know that the company pays out 80% of its earnings as didvidend and has a constant return on equity of 30%. The stock's required return is 12%. What is the fair price for this stock today? What is the present value of growth opportunities? Use 3 decimal points...

Cox Corporation recently reported EBITDA of $22.5 million and $5.4 million of net income. The company...

Cox Corporation recently reported EBITDA of $22.5 million and $5.4 million of net income. The company has $6 million interest expense and the corporate tax rate is 25 percent. What was the company's depreciation and amortization expense? Show work.

Parks Inc. had the following data for the year ending 12/31/2x: Net income = $300; Net...

Parks Inc. had the following data for the year ending 12/31/2x: Net income = $300; Net operating profit after taxes (NOPAT) = $400; Total assets = $2,500; Short-term investments = $200; Shareholders’ equity = $1,800; NOWC = $1200; Operating long-term assets $1,100. What was its return on invested capital (ROIC)?

Midland Corporation has a net income of $15 million and 6 million shares outstanding. Its common...

Midland Corporation has a net income of $15 million and 6 million shares outstanding. Its common stock is currently selling for $40 per share. Midland plans to sell common stock to set up a major new production facility with a net cost of $21,660,000. The production facility will not produce a profit for one year, and then it is expected to earn a 15 percent return on the investment. Wood and Gundy, an investment dealer, plans to sell the issue...

Question