xyz company has 40% debt 60% equity as optimal capital structure. the nominal interest rate for the company is 12% up to $5 million debt, above which...
 xyz company has 40% debt 60% equity as optimal capital structure. the nominal interest rate for the company is 12% up to $5 million debt, above which interest rate rises to 14%. expected net income for the year is $17,5 million, dividend payout ratio is 45%, last dividend distributed was $4,5/share, p0 = $37, g=5%, flotation costs 10% and corporate tax rate is 40%.    a. find the break points  b. calculate component costs (cost of each financing source)  c. calculate waccs.   d. two projects are available: 1st. project requires 15 million initial investments, irr=18% 2nd. project requires 10 million initial investments, irr=12%  please find the optimal capital budget. (project(s) to be invested in)
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my rule of thumb is ideally >20% (the higher the better), though there are exceptions if you're about to price yourself out of the market or there are other benefits to working at the new firm (e.g. employee benefits are better, the work is not fulfilling, better client alignment, etc). i wouldn't accept a pay cut, though. The simple interest formula is:  
I = P*R*T, where   
I - interest, P - principal, R - rate, T - time in years of the loan.  
Then, R = I/(P*T) =140/(500*7) = 0.04  
The rate is 4% 1. the expected pay-out on each policy is 250 * 1/90 + 12000 * 1/100 + 17000 * 1/400 = $165.  so that's what the premium would have to be in order to get a profit of 0.
 
2. the profit per policy is the premium the company receives minus the expected payout = 350 - 165 = $185.
 
3. the expected profit on 375 policies would be 375 * 185 = $69375 technically, new mexico does not have a sales tax, though it does have a gross receipts tax which functions in much the same way. the gross receipts tax rate currently ranges from 5.125% to 8.6875% depending on where the business is located. a) Let's find z - score:  
z = (x-mu)/sigma = (40,000-47,000)/4,000 = - 1.75  
p-value for z = 1.75 is 0.0401, for estimating the percent of the tires which last for at least 40,000 miles we have to consider right side of the distribution:  
P(x > 40,000) = (1-P(x < 40,000))*100% = 95.99 %  
  
  
b) the percent of the tires which are not last for at least 40,000 miles would be equal to P (x < 40,000) = 0.0401*100% = 4.01 %;  
c) for more than 50,000 miles   
z = (50,000-40,000)/4,000 = 2.5  
the probability would be  
P(x>50,000) = 00.62 % Max 

Hello Max,


There is a little typo on the solution. In a warmer winter you will have gas consumption reduced by 10%, that implies a reduction of 10% of sales and variable costs (the hypothesis is to consider them linearly dependant).


Talink about the Infrastructure costs, they are composed by fixed (60%) and variable(40%) costs. Applying the saving on the variable part you have:


240*40%*10%=9.6  

  

So that the new Infrastructure costs will be 240-9.6=230.4  

  

Does it make sense?  

Feel free to contact me if you have any doubt.  

  

Luca books of prateek and kushaljournal entries date particulars l.f. amt (rs.) amt (rs.) 2017june 30 interest on capital a/c drprofit and loss (suspense) a/c general reserve a/c to rockey’s capital a/c(share of profit, interest on capital and share of general reserve credited to rockey’s capital account) 2501,0004,571 5,821 june 30 prateek’s capital a/c dr.kushal’s capital a/c dr. to rockey’s capital a/c(rockey’s share of goodwill adjusted to prateek’s and kushal’s capital account in their gaining ratio, 3:2) 4,8003,200 8,000 june 30 rockey’s capital a/c dr. to rockey executor’s a/c(balance of rockey’s capital account transferred to his executor’s account) 33,821 33,821 rockey’s capital accountdr. cr. date particulars j.f. amount rs date particulars j.f. amount rs 2017april 1 rockey's executor a/c 33,821 2017april 1 balance b/d 20,000 interest on capital 250 profit and loss (suspense) a/c 1,000 general reserve 4,571 prateek’s capital 4,800 kushal’s capital 3,200 33,821 33,821 working notes:1. rockey’s share of profit = previous year’s profit × proportionate period × share of deceased partner= 14,000 x `3/12` x `2/7` = rs. 1,000. 2. rockey’s share of goodwillgoodwill of a firm = average profit × numbers of year’s purchaseaverage profit = `[ 12,000 + 16,000 + 14,000]/3 = [42,000]/3 = rs. 14,000`goodwill of a firm = 14,000 × 2 = rs 28,000 rockey's share = 28,000 x `2/7` = rs. 8,000 3. gaining ratio = new ratio − old ratioprateek's share = `3/5 - 3/7 = [21 - 15]/35 = 9/35` kushal's share = `2/5 - 2/7 = [14 - 10]/35 = 4/35`gaining ratio between prateek and kushal = 9:4 or 3:2 4. interest on capital for 3 months i.e. from april 1, 2017 to june 30, 2017amount of × rate of interest × period = 20,000 x `5/100` x `3/12` = rs.250. [tata altroz emi](/tata-altroz/car-loan-emi-calculator.htm) starts at ₹ 12,182 per month for a tenure of 60 months @ 9.8% for a loan amount of rs 5.76 lakh & down payment will be ₹ 64,000. column a answer (1) no-new company is formed. (c) absorption (2) 'goodwill or capital reserv (a) purchase method. (3) scheme of amalgamation (d) reqires approval of high court (4) transferer company (e) to be liquidated (5) profit on realisation (b) transferred to realisation a/c given: (i) xy = 4.5cm

(ii) yz = 5 cm

(iii) zx = 6 cm

to construct: a xyz

steps for construction

step 1 : first we will draw a line segment xy of length 4.5cm



step 2 : we have to draw an arc , taking x as center and radius 6cm



step 3 : we have to another arc, with radius 5cm and center at y and mark the intersection of arcs as z.



step 4 : we have to join xz and xy



this is the required triangle