corporatefinance - a. To be comfortably within the range,...

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a. To be “comfortably” within the range, the firm should stay off the low end of t Fixed Charge Coverage = 3.40 - 4.30 Cash Flow / Total Debt = 55 - 65 Long-Term Debt / Total Capitalization = 25 - 30 b. Ability to use fully non-interest tax credits and debt management considerations su c. The CFO needs to consider R&D and foreign tax credits. The additional tax shield
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the ratings. 0 such as issuance costs. ld from additional debt may not be valuable when R&D and foreign tax credits are taken into
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set and that lenders may not be willing to loan the same percentage of debt to Bixton as to its o consideration.
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competitors
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Equation is given as DPS1 - DPS0 = ADJ{POR(EPS1)-DPS0} or DPS1= DPS0 + ADJ{POR(EPS1)-DPS0} DPS(Current Year)= 1 + 0.75{.25(8)-1}= $1.75 DPS(After 1 year)= 1.75 + 0.75{.25(8)-1.75}=$1.9375 DPS(After 2 years)=1.9375 + 0.75{.25(8)-1.9375}= $1.9844 DPS(After 3 Year)= 1.9844 + 0.75{.25(8)-1.9844}= $1.9961 DPS(After 4 Year)= 1.9961 + 0.75{.25(8) – 1.9961}= $1.9990 D 1 = ADJ [POR(EPS 1 ) - D 0 ] + D 0 D 1 = 0.75 [0.25 x $8.00 - $1.00] + $1.00 = $1.75 D 2 = 0.75 [0.25 x $8.00 - $1.75] + $1.75 = $1.94 D 3 = 0.75 [0.25 x $8.00 - $1.94] + $1.94 = $1.985 D 4
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This note was uploaded on 09/14/2011 for the course STAT 101 taught by Professor Jones during the Spring '11 term at University of Phoenix.

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corporatefinance - a. To be comfortably within the range,...

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