E-Games 4 U Corporation is evaluating some capital investments for the coming year. Since capital investments...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
E-Games 4 U Corporation is evaluating some capital investments for the coming year. Since capital investments are a key factor for the firm's wealth creation, The board of directors has assigned you with finding the break points in their capital structure so that in the future they calculate properly the cost of capital. The firm has 1,345,722 common shares outstanding and can borrow up to $30,122,033 in new debt before the interest rate increases; the firm can then borrow any amount at the higher rate. Taxes are 31.9% and debt is 60% of the target capital structure. In addition, the firm forecast EPS of $33 for the current fiscal year and plans to continue with its historical dividend payout ratio of 39%. The firm does not use preferred equity. Hint: with the data above you can calculate retained earnings. Calculate the break point in the MCC schedule for Common Equity. Enter your answer in the box below, to the nearest penny. E-Games 4 U Corporation is evaluating some capital investments for the coming year. Since capital investments are a key factor for the firm's wealth creation, The board of directors has assigned you with finding the break points in their capital structure so that in the future they calculate properly the cost of capital. The firm has 1,345,722 common shares outstanding and can borrow up to $30,122,033 in new debt before the interest rate increases; the firm can then borrow any amount at the higher rate. Taxes are 31.9% and debt is 60% of the target capital structure. In addition, the firm forecast EPS of $33 for the current fiscal year and plans to continue with its historical dividend payout ratio of 39%. The firm does not use preferred equity. Hint: with the data above you can calculate retained earnings. Calculate the break point in the MCC schedule for Common Equity. Enter your answer in the box below, to the nearest penny.
Expert Answer:
Answer rating: 100% (QA)
Here are the stepbystep calculations to find the break point in the capital structure for common equ... View the full answer
Related Book For
Operations Management Creating Value Along the Supply Chain
ISBN: 978-1118301173
1st Canadian Edition
Authors: Roberta S. Russell, Bernard W. Taylor, Ignacio Castillo, Navneet Vidyarthi
Posted Date:
Students also viewed these finance questions
-
XYZ corp. board of directors decided a 1 for 10 reverse split. Tina owned 5000 shares of XYZ corp. which was selling for $1.50 per share. What will be Tina's share volume and price after the split?
-
Emerson Electric Company was founded in 1890 as a manufacturer of motors and fans. In 1993, Emerson marked its thirty-sixth consecutive year of improved earnings per share. On $8.2 billion sales, the...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
When average total cost is at its minimum: A. Average variable cost is declining with increases in output B. Average variable cost plus average fixed cost is declining with increases in output C....
-
Use the SOFTWARE INSTALL LIST to jump to (and therefore create) the SOFTWARE INSTALLATION LISTING. The elements on the listing are as follows: SOFTWARE INVENTORY NUMBER TITLE VERSION NUMBER HARDWARE...
-
Xavier Ltd. has a minimum profit margin of 12% on new products it manufactures. It has determined that the selling price for one of its products should be $68. The target cost for the product should...
-
Which of the following is not a characteristic that makes information useful? a. It is reliable. c. It is inexpensive. b. It is timely. d. It is relevant.
-
In a study of housing demand, the county assessor is interested in developing a regression model to estimate the market value (i.e., selling price) of residential property within his jurisdiction....
-
Question 1: A rocket having mass M is launched vertically with a trust force . b) Assume that the mass of the rocket M = 100 and the gravity g = 9.81 are constant. Derive the dynamic model of the...
-
Forecasting with the Parsimonious Method and Estimating Share Value Using the ROPI Model Following are income statements and balance sheets for Cisco Systems. Cisco Systems Consolidated Statements of...
-
The company provides the following information: a). All purchases of inventory were on account .b). Sales for the year were 972,000 c). The cost of goods sold for the year was 402,000 Compute how...
-
For the power series: I.) Write out the first four terms of the series sum and give the center of the power series; 2.) Use the Ratio or Root Test to find the Radius of Convergence and the Interval...
-
when is the earliest time frame that Porsch or Toyota can produce an EV with a range of 800 miles? Porsche, known for its elegant, high-performance sports cars, is now making an electric car that can...
-
Once the project's scope has been determined, the project team members should be selected based on their level of influence and knowledge of the process as well as their skills and abilities. True...
-
Pine Valley Golf Club would like you to price their brand-new menu item, The Valley Veggie Burger. They inform you that their desired food cost percentage is 28% and their food cost for the dish is...
-
A manufacturing concern furnishes the following information. The standard consumption for 70 kgs of output is 100 kgs of Raw Materials @ Rs 1/kg. The actual output was 210,000 kgs. 280,000 kgs of...
-
8. Consider the Lotka-Volterra equations for the joint dynamics of rabbits r(t) and coyotes c(t): dr | | dt dr dt dc dt de dt = 5r - 2rc = c+rc (a) Solve for the equilibrium solutions of this system...
-
Chao, Louis, and Mari, unrelated individuals, own all of the shares of Cerise Corporation. All three shareholders have been active in the management of Cerise since its inception. In the current...
-
Mill Mountain Coffee Company currently operates 12 coffee shops in downtown Kelowna. The company has been losing money and wants to downsize by closing some stores. Its policy has been to saturate...
-
Rushing yardage for the three top running backs during a recent Vanier Cup is given below. Which player is the most productive running back? How did you measure productivity? Lvesque Peressini Player...
-
Access the website of a company that sells products to the general public on the Internet. Discuss the quality attributes of the site, and evaluate the quality of the website.
-
Estimate the ending inventory by the gross profit method, given the following data: beginning inventory, \(\$ 40,000\); net purchases, \(\$ 100,000\); net sales, \(\$ 112,000\); average gross profit...
-
Use your operating systems built-in capability to encrypt a file. Store the enciy'pted file in a folder that can be shared with other users on that computer. Then create a new user account. Assign it...
-
Why do companies using LIFO in a perpetual inventory system often restate their ending inventory at the per-unit costs that result from applying periodic LIFO costing procedures?
Study smarter with the SolutionInn App