# 187613 189919 206750 229507 203682 v u 43700 1 34152

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\$187,613\$189,919\$206,750\$229,507\$203,682 VU= [\$43,700 ×(1 -.34)]/.152 = \$189,750VL= \$189,750 + (.34 ×\$50,000) = \$206,750ReferencesMultiple ChoiceLearning Objective: 13-02 Analyze the impact of taxes and bankruptcy on capital structure choice.Difficulty: 2 IntermediateSection: 13.4 Corporate Taxes and Capital StructurePage 18 of 20Assignment Print View12/2/2016
19.Award: 10.00 pointsGreat Lakes Shipping is an all-equity firm with anticipated earnings before interest and taxes of \$386,000 annually forever. The present cost of equity is 17.1 percent. Currently, the firm has no debt but is considering borrowing \$1.48 million at 8.5 percent interest. The tax rate is 35 percent. What is the value of the levered firm?\$1,985,251\$2,006,519\$1,888,47\$1,666,667\$2,018,181 VU = [\$386,000 ×(1 -.35)]/.171 = \$1,467,251.46VL= \$1,467,251.46 + (.35 ×\$1,480,000) = \$1,985,251ReferencesMultiple ChoiceLearning Objective: 13-02 Analyze the impact of taxes and bankruptcy on capital structure choice.Difficulty: 2 IntermediateSection: 13.4 Corporate Taxes and Capital StructurePage 19 of 20Assignment Print View12/2/2016
20.Award: 10.00 pointsJericho Snacks is an all-equity firm with estimated earnings before interest and taxes of \$624,000 annually forever. Currently, the firm has no debt but is considering borrowing \$725,000 at 6.75 percent interest. The tax rate is 35 percent and the current cost of equity is 15.2 percent. What is the value of the levered firm?\$3,187,271\$2,769,535\$3,307,271\$2,922,171\$3,506,418 VU= [\$624,000 ×(1 -.35)]/.152 = \$2,668,421.05VL= \$2,668,421.05 + (.35 ×\$725,000) = \$2,922,171ReferencesMultiple ChoiceLearning Objective: 13-02 Analyze the impact of taxes and bankruptcy on capital structure choice.Difficulty: 2 IntermediateSection: 13.4 Corporate Taxes and Capital StructurePage 20 of 20Assignment Print View12/2/2016
1.Award: 1.00 pointWhich one of the following is a payment of either cash or shares of stock that is paid out of earnings to a firm's shareholders?InterestCapital surplusRetained earningsDividendStock repurchase ReferencesMultiple ChoiceLearning Objective: 14-01 Discuss dividend types and how dividends are paid.Difficulty: 1 BasicSection: 14.1 Cash Dividends and Dividend PaymentPage 1 of 20Assignment Print View12/2/2016
2.Award: 1.00 pointThis morning, Structural Steel purchased 3,500 of its outstanding shares in the open market. What type of transaction was this?Stock payoutStock distributionStock dividendStock repurchaseStock reversal ReferencesMultiple ChoiceLearning Objective: 14-03 Differentiate between cash and stock dividends.Difficulty: 1 BasicSection: 14.3 Stock Repurchases: an Alternative to Cash DividendsPage 2 of 20Assignment Print View12/2/2016
3.Award: 1.00 pointWhich one of the following reduces the number of shares outstanding but does not decrease the value of owners' equity?