Business, 06.06.2020 17:59 zachzach28280

A consultant has collected the following information regarding Young Publishing: Total assets $3,000 million, Tax rate 40% Operating income (EBIT) $800 million, Debt ratio 0%, Interest expense $0 million, WACC 10%, Net income $480 million, M/B ratio 1.00, Share price $32.00, EPS = DPS $3.20, The company has no growth opportunities (g = 0), so the company pays out all of its earnings as dividends (EPS = DPS). The consultant believes that if the company moves to a capital structure financed with 20% debt and 80% equity (based on market values) that the cost of equity will increase to 11% and that the pre-tax cost of debt will be 10%. If the company makes this change, what would be the total market value (in millions) of the firm?

Answers: 3

Show answers

Other questions on the subject: Business

Business, 22.06.2019 09:30, ameliaduxha7

What are two benefits of consumer programs

Answers: 2

continue

Business, 22.06.2019 10:00, kortlen4808

mary's baskets company expects to manufacture and sell 30,000 baskets in 2019 for $5 each. there are 4,000 baskets in beginning finished goods inventory with target ending inventory of 4,000 baskets. the company keeps no work-in-process inventory. what amount of sales revenue will be reported on the 2019 budgeted income statement?

Answers: 2

continue

Business, 22.06.2019 11:30, pettygirl13

Florence invested in a factory requiring. federally-mandated reductions in carbon emissions. how will this impact florence as the factory's owner? a. her factory will be worth less once the upgrades are complete. b. her factory will likely be bought by the epa. c. florence will have to invest a large amount of capital to update the factory for little financial gain. d. florence will have to invest a large amount of capital to update the factory for a large financial gain.

Answers: 1

continue

Business, 22.06.2019 20:00, payshencec21

Ajax corp's sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. what was the firm's times-interest-earned (tie) ratio? a. 4.72b. 4.97c. 5.23d. 5.51e. 5.80

Answers: 1

continue

You know the right answer?

A consultant has collected the following information regarding Young Publishing: Total assets $3,000...