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Consider the following information from a company: Cash: 1.5 Account receivable: 2.4 Inventories:1.31 Net fixed assets 2.5 Total assets 7.71 on the other side I
Consider the following information from a company:
Cash: 1.5
Account receivable: 2.4
Inventories:1.31
Net fixed assets 2.5
Total assets 7.71
on the other side I have Long term debt: 4
Common equity 3.71
Total Debt and equity: 7.71
now company's common stock is selling for a price equal to 2 times its book value. Investors require a 10% return. firm's bond yield maturity is 6% and tax rate is 20%. at the end of the previous year, bonds were trading at their par value.
It is requested to calculate the capital structure of the company.
Cash: 1.5
Account receivable: 2.4
Inventories:1.31
Net fixed assets 2.5
Total assets 7.71
on the other side I have Long term debt: 4
Common equity 3.71
Total Debt and equity: 7.71
now company's common stock is selling for a price equal to 2 times its book value. Investors require a 10% return. firm's bond yield maturity is 6% and tax rate is 20%. at the end of the previous year, bonds were trading at their par value.
It is requested to calculate the capital structure of the company.
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
