capital structure?
Q. The capital structure for the CR Corporation is the following: bonds $5,500, and common stock $11,000. If CR has an after-tax cost of debt of 6%, and a 16% cost of common stock, what is its WACC? A) 9.33% B) 12.67% C) 13.33% D) 14.67%
Asked by Ashley - Tue Nov 27 17:03:55 2007 - - 2 Answers - 0 Comments
A. None of the above. I come up with 11.86
Answered by jeff410 - Tue Nov 27 19:21:17 2007
Q. The capital structure for the CR Corporation is the following: bonds $5,500, and common stock $11,000. If CR has an after-tax cost of debt of 6%, and a 16% cost of common stock, what is its WACC? A) 9.33% B) 12.67% C) 13.33% D) 14.67%
Asked by Ashley - Tue Nov 27 17:03:55 2007 - - 2 Answers - 0 Comments
A. None of the above. I come up with 11.86
Answered by jeff410 - Tue Nov 27 19:21:17 2007
What is capital structure and how to identify whether the company is more on debt or equity financing?
Q. Can you please explain what is the reason that cause the company's capital structure is more on debt financing and why?Also,explain what is the reason that cause the company's capital structure is more on equity financing and why?
Asked by YK - Mon Mar 23 04:59:14 2009 - - 1 Answers - 0 Comments
A. Debt Finance - Pros -Maintain control of the company -No stock issuing costs -No regulatory requirements Cons -Poorer net asset position -Interest -Can be difficult to obtain large loans Equity Finance Pros -Can obtain alot of money within a relatively short time -No interest payments -Maintain liquidity and asset ratios Cons -Strict regulations for public companies -Transfer control to shareholders -Large brokerage fees Just a few off the top of my head
Answered by Chuckles McGee - Mon Mar 23 06:00:35 2009
Q. Can you please explain what is the reason that cause the company's capital structure is more on debt financing and why?Also,explain what is the reason that cause the company's capital structure is more on equity financing and why?
Asked by YK - Mon Mar 23 04:59:14 2009 - - 1 Answers - 0 Comments
A. Debt Finance - Pros -Maintain control of the company -No stock issuing costs -No regulatory requirements Cons -Poorer net asset position -Interest -Can be difficult to obtain large loans Equity Finance Pros -Can obtain alot of money within a relatively short time -No interest payments -Maintain liquidity and asset ratios Cons -Strict regulations for public companies -Transfer control to shareholders -Large brokerage fees Just a few off the top of my head
Answered by Chuckles McGee - Mon Mar 23 06:00:35 2009
What are the components of the capital structure? What are the differences of these components?
Q. How do we determine the optimal mix of the components of the capital structure? Explain.
Asked by Faith B - Mon Jul 14 20:13:59 2008 - - 1 Answers - 0 Comments
A. The components which form a company's capital :ordinary shares, preference shares, debentures and loan stock. Stock is ownership Preferred stock gets dividend before common stock and is preferred in the event of a liquidation Debentures are unsecured debt Loan stock pledges shares to secure loan
Answered by jwishz - Thu Jul 17 18:42:31 2008
Q. How do we determine the optimal mix of the components of the capital structure? Explain.
Asked by Faith B - Mon Jul 14 20:13:59 2008 - - 1 Answers - 0 Comments
A. The components which form a company's capital :ordinary shares, preference shares, debentures and loan stock. Stock is ownership Preferred stock gets dividend before common stock and is preferred in the event of a liquidation Debentures are unsecured debt Loan stock pledges shares to secure loan
Answered by jwishz - Thu Jul 17 18:42:31 2008
What are the benefits that a firm enjoy when its capital structure is optimal ?
Q. in other words what are the purposes of determining an optimal capital structure ? i would appreciate it if you give me some sources on this topic.
Asked by Apathy - Fri Jul 20 17:38:14 2007 - - 1 Answers - 0 Comments
A. no clue
Answered by Memer - Fri Jul 20 17:41:45 2007
Q. in other words what are the purposes of determining an optimal capital structure ? i would appreciate it if you give me some sources on this topic.
Asked by Apathy - Fri Jul 20 17:38:14 2007 - - 1 Answers - 0 Comments
A. no clue
Answered by Memer - Fri Jul 20 17:41:45 2007
you have been asked by a corporation to evaluate its capital structure?
Q. It currently has 70 million shares outstanding, trading at $10 per share. In addition, it has 5000 convertible bonds, wit a coupon rate of 8%, trading at $1000 per bond. Corp is rated BBB, and the interest rate on BBB straight bonds is currently 10%. The beta for the company is 1.2, and the current risk-free rate is 6%. the tax rate is 40%. What is the firm's current debt/equity ratio? What is the firm's current weighted average cost of capital? Corporation is proposing to borrow $250 million and use it for the following purposes: Buy back $100 million worth of stock. Pay $100 million in dividends. Invest $50 million in a project with a NPV of $25 million. The effect of this additional borrowing will be a drop in the bond rating to B,… [cont.]
Asked by Darkgirl - Fri Apr 6 13:43:47 2007 - - 1 Answers - 0 Comments
A. You're asking us to do an aweful lot of work for you here. Why don't you break this up into individual questions for us? (For the WACC question, I'm going to do you a favor and tell you to work this out yourself with the proper equation. This is not something you just see and learn and move on, you have to excercise the formula to learn and remember it and see how it works. You have to be able to visualize the fact that interest is deductible so you can make fast, sharp decisions. We're not helping you by just giving you the answer.)
Answered by unknown - Sat Apr 7 02:49:25 2007
Q. It currently has 70 million shares outstanding, trading at $10 per share. In addition, it has 5000 convertible bonds, wit a coupon rate of 8%, trading at $1000 per bond. Corp is rated BBB, and the interest rate on BBB straight bonds is currently 10%. The beta for the company is 1.2, and the current risk-free rate is 6%. the tax rate is 40%. What is the firm's current debt/equity ratio? What is the firm's current weighted average cost of capital? Corporation is proposing to borrow $250 million and use it for the following purposes: Buy back $100 million worth of stock. Pay $100 million in dividends. Invest $50 million in a project with a NPV of $25 million. The effect of this additional borrowing will be a drop in the bond rating to B,… [cont.]
Asked by Darkgirl - Fri Apr 6 13:43:47 2007 - - 1 Answers - 0 Comments
A. You're asking us to do an aweful lot of work for you here. Why don't you break this up into individual questions for us? (For the WACC question, I'm going to do you a favor and tell you to work this out yourself with the proper equation. This is not something you just see and learn and move on, you have to excercise the formula to learn and remember it and see how it works. You have to be able to visualize the fact that interest is deductible so you can make fast, sharp decisions. We're not helping you by just giving you the answer.)
Answered by unknown - Sat Apr 7 02:49:25 2007
Allied uses debt in its capital structure, so some of the money used to finance the project will be debt. Give
Q. Allied uses debt in its capital structure, so some of the money used to finance the project will be debt. Given this fact, should the projected cash flows be revised to show projected interest charges? Explain.
Asked by Clark S - Thu Apr 12 20:03:33 2007 - - 1 Answers - 0 Comments
A. The Modigliani-Miller theorem (of Franco Modigliani, Merton Miller) forms the basis for modern thinking on capital structure. The basic theorem states that, in the absence of taxes, bankruptcy costs, and asymmetric information, and in an efficient market, the value of a firm is unaffected by how that firm is financed. It does not matter if the firm's capital is raised by issuing stock or selling debt. It does not matter what the firm's dividend policy is. Even if you have to tweak the numbers slightly to account for the debt load it will all even out in the end.
Answered by poor_broke_investor - Thu Apr 12 20:08:30 2007
Q. Allied uses debt in its capital structure, so some of the money used to finance the project will be debt. Given this fact, should the projected cash flows be revised to show projected interest charges? Explain.
Asked by Clark S - Thu Apr 12 20:03:33 2007 - - 1 Answers - 0 Comments
A. The Modigliani-Miller theorem (of Franco Modigliani, Merton Miller) forms the basis for modern thinking on capital structure. The basic theorem states that, in the absence of taxes, bankruptcy costs, and asymmetric information, and in an efficient market, the value of a firm is unaffected by how that firm is financed. It does not matter if the firm's capital is raised by issuing stock or selling debt. It does not matter what the firm's dividend policy is. Even if you have to tweak the numbers slightly to account for the debt load it will all even out in the end.
Answered by poor_broke_investor - Thu Apr 12 20:08:30 2007
The capital structure weights used in computing the weighted average cost of capital:?
Q. A. are based on the book values of total debt and total equity. B. are based on the market value of the firm's debt and equity securities. C. are computed using the book value of the long-term debt and the book value of equity. D. remain constant over time unless the firm issues new securities. E. are restricted to the firm's debt and common stock.
Asked by Amanda S - Tue Feb 17 14:49:52 2009 - - 1 Answers - 0 Comments
A. depends on how u can make believe your one up manship
Answered by pai - Tue Feb 17 15:00:07 2009
Q. A. are based on the book values of total debt and total equity. B. are based on the market value of the firm's debt and equity securities. C. are computed using the book value of the long-term debt and the book value of equity. D. remain constant over time unless the firm issues new securities. E. are restricted to the firm's debt and common stock.
Asked by Amanda S - Tue Feb 17 14:49:52 2009 - - 1 Answers - 0 Comments
A. depends on how u can make believe your one up manship
Answered by pai - Tue Feb 17 15:00:07 2009
Explain the advantages and disadvantages of a highly geared capital structure.?
Q. can someone pls help me in understanding this question. pls explain in broad.
Asked by sweetheart - Thu May 8 15:35:54 2008 - - 1 Answers - 0 Comments
A. Debt financing (or borrowing) has both advantages and disadvantages. The primary advantage of debt financing is that it allows the founders to retain ownership and control of the company. In contrast to equity financing, the entrepreneurs are able to make key strategic decisions and also to keep and reinvest more company profits. Another advantage of debt financing is that it provides small business owners with a greater degree of financial freedom than equity financing. Debt obligations are limited to the loan repayment period, after which the lender has no further claim on the business, whereas equity investors' claim does not end until their stock is sold. Furthermore, a debt that is paid on time can enhance a small business's credit… [cont.]
Answered by Sandy - Sun May 11 23:29:35 2008
Q. can someone pls help me in understanding this question. pls explain in broad.
Asked by sweetheart - Thu May 8 15:35:54 2008 - - 1 Answers - 0 Comments
A. Debt financing (or borrowing) has both advantages and disadvantages. The primary advantage of debt financing is that it allows the founders to retain ownership and control of the company. In contrast to equity financing, the entrepreneurs are able to make key strategic decisions and also to keep and reinvest more company profits. Another advantage of debt financing is that it provides small business owners with a greater degree of financial freedom than equity financing. Debt obligations are limited to the loan repayment period, after which the lender has no further claim on the business, whereas equity investors' claim does not end until their stock is sold. Furthermore, a debt that is paid on time can enhance a small business's credit… [cont.]
Answered by Sandy - Sun May 11 23:29:35 2008
What s the main goal of the manager in capital structure?
Q. a. decrease the debt b. increase the investment with safe source than risky one c. increase the size of the pie d. debt and equity issue
Asked by jack brown - Tue Jun 16 20:37:34 2009 - - 1 Answers - 0 Comments
A. d. debt and equity issue
Answered by Tee Kay - Tue Jun 16 20:46:15 2009
Q. a. decrease the debt b. increase the investment with safe source than risky one c. increase the size of the pie d. debt and equity issue
Asked by jack brown - Tue Jun 16 20:37:34 2009 - - 1 Answers - 0 Comments
A. d. debt and equity issue
Answered by Tee Kay - Tue Jun 16 20:46:15 2009
What is a firms target capital structure consistant with.?
Q. What is a firms target capital structure consistant with.?
Asked by Tina - Fri Nov 13 17:03:26 2009 - - 1 Answers - 0 Comments
A. Minimizing their weighted average cost of capital.
Answered by jeff410 - Fri Nov 13 19:05:00 2009
Q. What is a firms target capital structure consistant with.?
Asked by Tina - Fri Nov 13 17:03:26 2009 - - 1 Answers - 0 Comments
A. Minimizing their weighted average cost of capital.
Answered by jeff410 - Fri Nov 13 19:05:00 2009
Explain the Modigliani and Miller models of capital structure both with and without corporate income taxs.?
Q. Specifically, explain the relationship between debt leverage and the value of the firm and between debt leverage and the cost of capital.
Asked by queenitrite3 - Thu Jun 12 22:58:24 2008 - - 1 Answers - 0 Comments
A. Log on here to know what all you want to. https://www.highbeam.com/ reg/reg1.aspx?full=yes&or igurl=/doc/1G1-53997087.h tml
Answered by gosain - Mon Jun 16 13:13:19 2008
Q. Specifically, explain the relationship between debt leverage and the value of the firm and between debt leverage and the cost of capital.
Asked by queenitrite3 - Thu Jun 12 22:58:24 2008 - - 1 Answers - 0 Comments
A. Log on here to know what all you want to. https://www.highbeam.com/ reg/reg1.aspx?full=yes&or igurl=/doc/1G1-53997087.h tml
Answered by gosain - Mon Jun 16 13:13:19 2008
Company W operates in a perfect capital market. The company just revised its capital structure from a debt-..?
Q. equity ratio of .25 to debt equity ratio of .40. The firm's shareholders who prefer the old capital structure should: a. sell some shares are hold the sale proceeds in cash. b. sell all of their shares and loan out the entire sale proceeds. c. do nothing d. sell some shares and loan out the sale proceeds. e. borrow funds and purchase more shares.
Asked by George - Mon Nov 30 23:08:54 2009 - - 2 Answers - 0 Comments
Q. equity ratio of .25 to debt equity ratio of .40. The firm's shareholders who prefer the old capital structure should: a. sell some shares are hold the sale proceeds in cash. b. sell all of their shares and loan out the entire sale proceeds. c. do nothing d. sell some shares and loan out the sale proceeds. e. borrow funds and purchase more shares.
Asked by George - Mon Nov 30 23:08:54 2009 - - 2 Answers - 0 Comments
Need help determing the capital structure of the Grocery Industry. What percent Debt & What percent equity?
Q. Need help determing the capital structure of the Grocery Industry. What percent Debt & What percent equity?
Asked by Financial Guru - Sun Mar 4 19:44:33 2007 - - 1 Answers - 0 Comments
A. Hi Whitey, for accuracy, you may check with your SEC office. I believe financial statement can be viewed by the public, as customer or investor. But I assume the liability is greater because most of the goods sold inside the gorceries were on consigment by the manufacturer or dealer.
Answered by dondatu - Sun Mar 4 19:54:39 2007
Q. Need help determing the capital structure of the Grocery Industry. What percent Debt & What percent equity?
Asked by Financial Guru - Sun Mar 4 19:44:33 2007 - - 1 Answers - 0 Comments
A. Hi Whitey, for accuracy, you may check with your SEC office. I believe financial statement can be viewed by the public, as customer or investor. But I assume the liability is greater because most of the goods sold inside the gorceries were on consigment by the manufacturer or dealer.
Answered by dondatu - Sun Mar 4 19:54:39 2007
What is meant by "an optimal capital structure of the firm"? when discussing cost of capital, etc.?
Q. What is meant by "an optimal capital structure of the firm"? when discussing cost of capital, etc.?
Asked by Tom L - Tue Nov 20 20:11:37 2007 - - 1 Answers - 0 Comments
A. in its simplest terms, the Optimal (target) Capital Structure is the Debt-to-Equity ratio of the firm which results in the lowest possible WACC (weighted average cost of capital). By acheiving this, we maximize the value of the firm. At this point the firm is also maxmizing the tax benefits of its debt while minimizing the possibility of financial distress. check this out: www.business.uiuc.edu/gpi nteri/capitalstructure.pd f
Answered by jaymay2008 - Tue Nov 20 21:59:23 2007
Q. What is meant by "an optimal capital structure of the firm"? when discussing cost of capital, etc.?
Asked by Tom L - Tue Nov 20 20:11:37 2007 - - 1 Answers - 0 Comments
A. in its simplest terms, the Optimal (target) Capital Structure is the Debt-to-Equity ratio of the firm which results in the lowest possible WACC (weighted average cost of capital). By acheiving this, we maximize the value of the firm. At this point the firm is also maxmizing the tax benefits of its debt while minimizing the possibility of financial distress. check this out: www.business.uiuc.edu/gpi nteri/capitalstructure.pd f
Answered by jaymay2008 - Tue Nov 20 21:59:23 2007
What is meant by "an optimal capital structure of the firm"?
Q. What is meant by "an optimal capital structure of the firm"?
Asked by Nett - Tue Jun 16 21:26:42 2009 - - 2 Answers - 0 Comments
A. Each component in the capital structure, debt, common equity, retained earning and preferred stock, have an oportunity cost. At the optimal cost of capital the weighted average cost of capital is at a minimum and the value of the firm is maximized.
Answered by jeff410 - Tue Jun 16 22:06:40 2009
Q. What is meant by "an optimal capital structure of the firm"?
Asked by Nett - Tue Jun 16 21:26:42 2009 - - 2 Answers - 0 Comments
A. Each component in the capital structure, debt, common equity, retained earning and preferred stock, have an oportunity cost. At the optimal cost of capital the weighted average cost of capital is at a minimum and the value of the firm is maximized.
Answered by jeff410 - Tue Jun 16 22:06:40 2009
Can a firm's capital structure effect a firms value?
Q. Some question ive been asked, and i don't know where to start! please help!
Asked by rob_b_taylor - Thu Apr 24 09:56:25 2008 - - 1 Answers - 0 Comments
A. Yes (despite what Modigliani-Miller states). Start from the fact that interest expenses are tax deductible, while dividends are not: as a consequence, debt reduces the tax burden, hence creating value for the shareholders. If you need a quick summary, follow the link below.
Answered by Jimmy B - Thu Apr 24 11:55:22 2008
Q. Some question ive been asked, and i don't know where to start! please help!
Asked by rob_b_taylor - Thu Apr 24 09:56:25 2008 - - 1 Answers - 0 Comments
A. Yes (despite what Modigliani-Miller states). Start from the fact that interest expenses are tax deductible, while dividends are not: as a consequence, debt reduces the tax burden, hence creating value for the shareholders. If you need a quick summary, follow the link below.
Answered by Jimmy B - Thu Apr 24 11:55:22 2008
How do taxes affect the target capital structure?
Q. need help
Asked by Bored Student - Mon Mar 1 11:47:25 2010 - - 0 Answers - 0 Comments
Q. need help
Asked by Bored Student - Mon Mar 1 11:47:25 2010 - - 0 Answers - 0 Comments
explain what is meant by "gearing" in relation to capital structure? and why is gearing important?
Q. explain what is meant by "gearing" in relation to capital structure? and why is gearing important?
Asked by Dejah - Tue Jul 7 23:08:15 2009 - - 1 Answers - 0 Comments
A. Gearing is the same as leverage. You can find the answer in the link.
Answered by Sandy - Wed Jul 8 01:04:16 2009
Q. explain what is meant by "gearing" in relation to capital structure? and why is gearing important?
Asked by Dejah - Tue Jul 7 23:08:15 2009 - - 1 Answers - 0 Comments
A. Gearing is the same as leverage. You can find the answer in the link.
Answered by Sandy - Wed Jul 8 01:04:16 2009
what is the basic goal of organization regarding capital structure?
Q. what is the basic goal of organization regarding capital structure?
Asked by nimE - Sat Oct 25 09:28:23 2008 - - 1 Answers - 0 Comments
A. If by capital structure you mean how companies are financed (i.e. the bottom part of the company's Balance Sheet), then the answer would be: to have a lower gearing ratio. In other word, to have less debt and more equity (e.g. money invested by owners or shareholders). Gearing Ratio = Debt/Equity (there are few other formulae for this but this is the most common one used) Most companies are financed by a mixture of debt and equity. If a company has too much debt compared to equity (e.g. 90% debt and 10% equity) then the company is said to have high gearing ratio. So, the higher the debt compared to equity, the higher the gearing ratio will be. Companies with higher gearing ratios are perceived by investors as risky because: 1) higher… [cont.]
Answered by Smart Community - Kazol.co.nr - Sat Oct 25 10:12:35 2008
Q. what is the basic goal of organization regarding capital structure?
Asked by nimE - Sat Oct 25 09:28:23 2008 - - 1 Answers - 0 Comments
A. If by capital structure you mean how companies are financed (i.e. the bottom part of the company's Balance Sheet), then the answer would be: to have a lower gearing ratio. In other word, to have less debt and more equity (e.g. money invested by owners or shareholders). Gearing Ratio = Debt/Equity (there are few other formulae for this but this is the most common one used) Most companies are financed by a mixture of debt and equity. If a company has too much debt compared to equity (e.g. 90% debt and 10% equity) then the company is said to have high gearing ratio. So, the higher the debt compared to equity, the higher the gearing ratio will be. Companies with higher gearing ratios are perceived by investors as risky because: 1) higher… [cont.]
Answered by Smart Community - Kazol.co.nr - Sat Oct 25 10:12:35 2008
how can using more debt can impact a firm s capital structure?
Q. how can using more debt can impact a firm s capital structure?
Asked by Laura Lea - Mon Jun 23 15:25:26 2008 - - 1 Answers - 0 Comments
A. The additional debt constitutes additional liabilities which in turn reduce capital value on the balance sheet (the debt must be backed or subordinated by something?)
Answered by ronald.glass@sbcglobal.net - Mon Jun 23 16:47:53 2008
Q. how can using more debt can impact a firm s capital structure?
Asked by Laura Lea - Mon Jun 23 15:25:26 2008 - - 1 Answers - 0 Comments
A. The additional debt constitutes additional liabilities which in turn reduce capital value on the balance sheet (the debt must be backed or subordinated by something?)
Answered by ronald.glass@sbcglobal.net - Mon Jun 23 16:47:53 2008
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