Answered step by step
Verified Expert Solution
Question
1 Approved Answer
can i get help with these please E-Games 4 U Corporation is evaluating some capital investments for the coming year. Since capital investments are a
can i get help with these please
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 1,464,634 common shares outstanding and can borrow up to $35,943,864 in new debt before the interest rate increases; the firm can then borrow any amount at the higher rate. Taxes are 23% and debt is 51% of the target capital structure. In addition, the firm forecast EPS of $30 for the current fiscal year and plans to continue with its historical dividend payout ratio of 41%. 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. General Lithograph Corporation uses no preferred stock. Their capital structure uses 78% debt (hint: the rest is equity). Their marginal tax rate is 37.44%. Their before-tax cost of debt is 6.74%. General Lithograph's stock has a beta of 3.06. The current risk-free rate is 2.4%, and the overall market is expected to return 7.57% over the long-run. What is General Lithograph's weighted average cost of capital (WACC)? Please enter without using the "%", but with two decimal places (in other words if you calculate 9.87%, then just enter 9.87). Hammond/Lauderdale Corporation uses no preferred stock. Their capital structure uses 79% debt (hint: the rest is equity). Their marginal tax rate is 31.81%. Their cost of equity is 10.86%, and their before-tax cost of debt is 6.36%. What is Hammond/Lauderdale's weighted average cost of capital (WACC)? Please enter without using the "%", but with two decimal places (in other words if you calculate 9.87%, then just enter 9.87) Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started