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Castillo Products Company ( Continued ) A . Calculate the net profit margin, total - sales - to - total - assets ratio, the equity
Castillo Products Company Continued
A Calculate the net profit margin, totalsalestototalassets ratio, the equity multiplier, and the return on equity for both and for the Castillo Products Corporation. Describe what happened in terms of financial pertormance between the two years.
B Estimate the cost of shortterm bank loans, longterm debt, and common equity capital for the Castillo Products Corporation.
C Although, Castillo Products paid a low effective tax rate in a percent income tax rate is considered more appropriate when looking to the future. Estimate the aftertax cost of shortterm bank loans, longterm debt, and the venture's common equity.
D Estimate the weighted average cost of capital WACC for the Castillo Products Corporation using the book values of interestbearing debt and stockholders' equity capital at the end of
E Cindy and Rob estimate that the market value of the common equity in the venture is $ at the end of The market values of interestbearing debt are judged to be the same as the recorded book values at the end of Estimate the market valuebased weighted average cost of capital for Castillo Products.
F Would you recommend to Cindy and Rob that they use the book valuebased WACC estimate or the market valuebased WACC estimate for planning purposes? Why?
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