Question

Here are data on two firms: Equity ($ million) Debt ($ million) ROC (%) Cost of...

Here are data on two firms: Equity ($ million) Debt ($ million) ROC (%) Cost of Capital (%)

Acme 140 100 18 8

Apex 450 150 16 9

a-1. Calculate the economic value added? (Do not round intermediate calculations. Enter your answers in millions)

a-2. Which firm has the higher economic value added? Acme has higher economic value added Apex has higher economic value added

b-1. Calculate the economic value added per dollar of invested capital? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

b-2. Which has higher economic value added per dollar of invested capital? Acme has higher economic value added per dollar of invested capital Apex has higher economic value added per dollar of invested capital

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Home Depot entered fiscal 2017 with a total capitalization of $21,898 million. In 2017, debt investors...
Home Depot entered fiscal 2017 with a total capitalization of $21,898 million. In 2017, debt investors received interest income of $875 million. Net income to shareholders was $8,648 million. (Assume a tax rate of 21%.) Calculate the economic value added assuming its cost of capital is 10%. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Economic value added = __________ million
Home Depot entered fiscal 2017 with a total capitalization of $21,895 million. In 2017, debt investors...
Home Depot entered fiscal 2017 with a total capitalization of $21,895 million. In 2017, debt investors received interest income of $874 million. Net income to shareholders was $8,645 million. (Assume a tax rate of 21%.) Calculate the economic value added assuming its cost of capital is 10%. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
Home Depot entered fiscal 2016 with a total capitalization of $27,252 million. In 2016, debt investors...
Home Depot entered fiscal 2016 with a total capitalization of $27,252 million. In 2016, debt investors received interest income of $843 million. Net income to shareholders was $6,384 million. (Assume a tax rate of 35%.) Calculate the economic value added assuming its cost of capital is 10%. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
Hatter, Inc., has equity with a market value of $23.1 million and debt with a market...
Hatter, Inc., has equity with a market value of $23.1 million and debt with a market value of $9.24 million. The cost of debt is 10 percent per year. Treasury bills that mature in one year yield 6 percent per year, and the expected return on the market portfolio over the next year is 11 percent. The beta of the company’s equity is 1.16. The firm pays no taxes. a. What is the company’s debt−equity ratio? (Do not round intermediate...
If a firm has retained earnings of $22.5 million, a common shares account of $274.5 million,...
If a firm has retained earnings of $22.5 million, a common shares account of $274.5 million, and additional paid-in capital of $99.5 million, how would these accounts change in response to a 20 percent stock dividend? Assume market value of equity is equal to book value of equity. (Enter your answers in dollars not in millions. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your final answers to the...
1.Ogier Incorporated currently has $900 million in sales, which are projected to grow by 8% in...
1.Ogier Incorporated currently has $900 million in sales, which are projected to grow by 8% in Year 1 and by 4% in Year 2. Its operating profitability (OP) is 7%, and its capital requirement (CR) is 65%. Do not round intermediate calculations. Enter your answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to two decimal places. What are the projected sales in Years 1 and 2? Sales in...
Steinberg Corporation and Dietrich Corporation are identical firms except that Dietrich is more levered. Both companies...
Steinberg Corporation and Dietrich Corporation are identical firms except that Dietrich is more levered. Both companies will remain in business for one more year. The companies' economists agree that the probability of the continuation of the current expansion is 80 percent for the next year, and the probability of a recession is 20 percent. If the expansion continues, each firm will generate earnings before interest and taxes (EBIT) of $3.9 million. If a recession occurs, each firm will generate earnings...
Steinberg Corporation and Dietrich Corporation are identical firms except that Dietrich is more levered. Both companies...
Steinberg Corporation and Dietrich Corporation are identical firms except that Dietrich is more levered. Both companies will remain in business for one more year. The companies' economists agree that the probability of the continuation of the current expansion is 80 percent for the next year, and the probability of a recession is 20 percent. If the expansion continues, each firm will generate earnings before interest and taxes (EBIT) of $4.1 million. If a recession occurs, each firm will generate earnings...
If a firm has retained earnings of $22.2 million, a common shares account of $274.2 million,...
If a firm has retained earnings of $22.2 million, a common shares account of $274.2 million, and additional paid-in capital of $99.2 million, how would these accounts change in response to a 20 percent stock dividend? Assume market value of equity is equal to book value of equity. (Enter your answers in dollars not in millions. Leave no cells blank – be certain to enter "0" wherever required. Do not round intermediate calculations and round your final answers to the...
Eaton, Inc., wishes to expand its facilities. The company currently has 5 million shares outstanding and...
Eaton, Inc., wishes to expand its facilities. The company currently has 5 million shares outstanding and no debt. The stock sells for $36 per share, but the book value per share is $8. Net income is currently $4 million. The new facility will cost $45 million, and it will increase net income by $780,000. Assume a constant price-earnings ratio. a-1 Calculate the new book value per share. (Do not round intermediate calculations and round your answer to 2 decimal places,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT