Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please do this ASAP. (b) Consider the following cash flows of two mutually exclusive projects for L and S. Assume that the discount rate is

image text in transcribed

please do this ASAP.

(b) Consider the following cash flows of two mutually exclusive projects for L and S. Assume that the discount rate is 10%. Year Expected After-Tax Net Cash Flows Project L $(100) 10 Project S $(100) 70 1 2 60 50 3 80 30 Calculate NPV, PI, MIRR, and Pay back period of project L. Based on the NPV, PI, MIRR, Payback Period which project should be taken? Assume that targeted payback period is 2 years. [NPV = $ 27.50; PIs = 1.27; MIRRs = 19.28%, PBPs = 1.6 Years][4] 2. (a) What are the factors that affect a firm's target capital structure? Briefly explain the signaling theory [1+1 = 2] (b) Following is the most recent income statement for XYZ CO. It has no preferred stock. Number common stock outstanding is 1000. Sales 30,000 units @Taka 20 Variable costs (40%) of sales GP (Gross profit) FC 50,000 EBIT Interest expense (Bank loan of Taka 100, 000 with 10% annual interest expense Taxable Income (EBT) Taxes (40%) Net Income Assume that sales increase by 50%. Using the information, calculate the DOL, DFL, and DTL. [4]

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Markets And Institutions

Authors: Jeff Madura

13th Edition

0357130790, 978-0357130797

More Books

Students also viewed these Finance questions

Question

Where do emotions come from? What function do they serve?

Answered: 1 week ago