Accounting Help for College and University Students

Calculating the Cost of Debt for Ying

Ying Import has several bond issuances outstanding, each making semiannual interest payments. The bonds are listed in table attached. If the corporate tax rate is 34%, what is the aftertax cost of Ying's debt? Coupon Price Face Bond Rate Quote Maturity Value 1 8.00% $106.38 5 years 10,000,000 2 7.50% $98.00 8 years 45, ...continues

Calculating the cost of debt after tax.

Calculate the after-tax cost of debt under each of the following conditions: a) Interest rate 10%, tax 0% b) Interest rate 10%, tax 40% c) Interest rate 10%, tax 60%

Calculate cost of retained earnings using the discounted cash flow method

JO company's last dividend per share was $1. The stock sells for $20 per share. The expected growth rate is a constant 5 percent. Calculate the cost of retained earnings using the discounted cash flow method.

EBIT and Leverage

Big Apple, Inc., has no debt outstanding and a total market value of $80,000. Earnings before interest and taxes, EBIT, are projected to be $10,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 30% higher. If there is a recession, then EBIT will be 60% lower. Big Apple is c ...continues

Break-Even EBIT

Duval Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Duval would have 400,000 shares of stock outstanding. Under Plan II, there would be 200,000 shares of stock outstanding and $5 million in debt outstanding. The interest rate on the debt is 1 ...continues

Calculating WACC

Nichols Industries has a debt-equity ratio of 1.5. Its WACC is 16%, and its cost of debt is 11%. There is no corporate tax. a. What is Nichols's cost of equity capital? b. What would the cost of equity be if the debt-equity ratio were 1.0? What if it were 0.5? What if it were zero?

Cash Flow

1. What are the trades offs between growing a company on its own cash flow versus selling shares of the company to raise expansion capital? 2. Give an example (with representative BEP data and conclusion) how would Break Even Analysis is used in making decision involving an organization? Discuss why a current public com ...continues

12 Multiple choice questions on portfolio of stocks, beta of stocks, beta of portfolio, CAPM, market rate, market risk premium , diversified portfolio , market risk , Security Market Line, unsystematic risk, default-free rate, expected inflation rate, etc.

1 In a portfolio of three different stocks, which of the following could not be true? a. The riskiness of the portfolio is less than the riskiness of each of the stocks if they were held in isola-tion. b. The riskiness of the portfolio is greater than the riskiness of one or two of the stocks. c. The beta of the portfolio ...continues

Multiple choice questions on bonds, yields

13. Hanratty Inc.'s stock and the stock market have generated the following returns over the past five years: Year Hanratty Market (kM) 1 13% 9% 2 18 15 3 -5 -2 4 23 19 5 6 12 On the basis of these historical returns, what is the estimated beta of Hanratty Inc.'s stock? a. 0.7839 b. 0.9988 c. 1.275 ...continues

Balance Sheet

Prepare a balance sheet from the following information: Stock of goods - $13,000 Loan from Bank - $58,000 Freehold Land and buildings - $64,000 Cash - $1,000 Trade Creditors - $10,000 Bank Overdraft - $10,700 Delivery van - $3,200 Office Furniture - $4,600 Fixtures and fittings - $15,200 Owner's Equity = ?