10 also table 1210 capital structures associated with

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: s for Cooke Company Capital structure ($000) Debt ratio (1) Total assetsa (2) Debt [(1) (2)] (3) 0% Equity [(2) (3)] (4) Shares of common stock outstanding (000) [(4) $20]b (5) 25.00 $500 $0 $500 10 500 50 450 22.50 20 500 100 400 20.00 30 500 150 350 17.50 40 500 200 300 15.00 50 500 250 250 12.50 60 500 300 200 10.00 aBecause the firm, for convenience, is assumed to have no current liabilities, its total assets equal its total capital of $500,000. bThe $20 value represents the book value per share of common stock equity noted earlier. 16. This assumption is needed so that we can assess alternative capital structures without having to consider the returns associated with the investment of additional funds raised. Attention here is given only to the mix of capital, not to its investment. 528 PART 4 Long-Term Financial Decisions TABLE 12.11 Capital structure debt ratio 0% Level of Debt, Interest Rate, and Dollar Amount of Annual Interest Associated with Cooke Company’s Alternative Capital Structures Debt ($000) (1) $0 Interest rate on all debt (2) 0.0% 9.0 Interest ($000) [(1) (2)] (3) $ 0.00 10 50 4.50 20 100 9.5 9.50 30 150 10.0 15.00 40 200 11.0 22.00 50 250 13.5 33.75 6...
View Full Document

This document was uploaded on 01/19/2014.

Ask a homework question - tutors are online