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1. An investor bought 500 Assyx shares, a corporation with a constant dividend growth ratio and a 60% retained earnings ratio. The company holds 10000
1. An investor bought 500 Assyx shares, a corporation with a constant dividend growth ratio and a 60% retained earnings ratio. The company holds 10000 outstanding shares and has a financial leverage ratio (book values) of 30%. Earnings per share are in value of 2$ and the return on debt is 10%. The capital structure of the corporation is presented in the table below: Capital structure Market value (S) Equity 100000 Debt 24000 The WACC under taxation is 20.174%. Compute: a. The return on equity b. The end-of-the-year capital owned by the investor c. The end-of-the-year net capital given a 5% tax on dividends and a 16% tax on capital gain? 1. An investor bought 500 Assyx shares, a corporation with a constant dividend growth ratio and a 60% retained earnings ratio. The company holds 10000 outstanding shares and has a financial leverage ratio (book values) of 30%. Earnings per share are in value of 2$ and the return on debt is 10%. The capital structure of the corporation is presented in the table below: Capital structure Market value (S) Equity 100000 Debt 24000 The WACC under taxation is 20.174%. Compute: a. The return on equity b. The end-of-the-year capital owned by the investor c. The end-of-the-year net capital given a 5% tax on dividends and a 16% tax on capital gain
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