Maxwell Corporation currently has a capital structure made e…
Questions
Mаxwell Cоrpоrаtiоn currently hаs a capital structure made entirely of equity with total invested capital of $12 million made up of 100,000 shares of common stock. They are considering issuing new debt to replace some of this equity. Maxwell currently has a beta of 2, and is considering replacing either $2 million in equity or $5 million in equity with new debt. Maxwell’s current corporate tax rate is 30%. The interest rate (rd) on $2 million of debt is 7%. The interest rate (rd) on $5 million in debt is 14%. The risk-free rate is 4% and the required return on the market is 10%. Maxwell has an EBIT of $3 million this year. Assume Maxwell has a payout ratio of 35% regardless of its capital structure and that their growth rate in earnings is 5% annually. a. What will be Maxwell’s new levered beta if it replaces $5 million in equity with debt? b. What will be Maxwell’s weighted average cost of capital (WACC) if it utilizes $5 million in debt? c. What would be Maxwell’s earnings per share (EPS) if it issued $5 million in debt? d. Assuming g=5%, what would be Maxwell’s stock price per share if it issued $5 million in debt? (Assume Maxwell just paid a dividend based on their current year earnings)
Mаxwell Cоrpоrаtiоn currently hаs a capital structure made entirely of equity with total invested capital of $12 million made up of 100,000 shares of common stock. They are considering issuing new debt to replace some of this equity. Maxwell currently has a beta of 2, and is considering replacing either $2 million in equity or $5 million in equity with new debt. Maxwell’s current corporate tax rate is 30%. The interest rate (rd) on $2 million of debt is 7%. The interest rate (rd) on $5 million in debt is 14%. The risk-free rate is 4% and the required return on the market is 10%. Maxwell has an EBIT of $3 million this year. Assume Maxwell has a payout ratio of 35% regardless of its capital structure and that their growth rate in earnings is 5% annually. a. What will be Maxwell’s new levered beta if it replaces $5 million in equity with debt? b. What will be Maxwell’s weighted average cost of capital (WACC) if it utilizes $5 million in debt? c. What would be Maxwell’s earnings per share (EPS) if it issued $5 million in debt? d. Assuming g=5%, what would be Maxwell’s stock price per share if it issued $5 million in debt? (Assume Maxwell just paid a dividend based on their current year earnings)
Mаxwell Cоrpоrаtiоn currently hаs a capital structure made entirely of equity with total invested capital of $12 million made up of 100,000 shares of common stock. They are considering issuing new debt to replace some of this equity. Maxwell currently has a beta of 2, and is considering replacing either $2 million in equity or $5 million in equity with new debt. Maxwell’s current corporate tax rate is 30%. The interest rate (rd) on $2 million of debt is 7%. The interest rate (rd) on $5 million in debt is 14%. The risk-free rate is 4% and the required return on the market is 10%. Maxwell has an EBIT of $3 million this year. Assume Maxwell has a payout ratio of 35% regardless of its capital structure and that their growth rate in earnings is 5% annually. a. What will be Maxwell’s new levered beta if it replaces $5 million in equity with debt? b. What will be Maxwell’s weighted average cost of capital (WACC) if it utilizes $5 million in debt? c. What would be Maxwell’s earnings per share (EPS) if it issued $5 million in debt? d. Assuming g=5%, what would be Maxwell’s stock price per share if it issued $5 million in debt? (Assume Maxwell just paid a dividend based on their current year earnings)
Mаxwell Cоrpоrаtiоn currently hаs a capital structure made entirely of equity with total invested capital of $12 million made up of 100,000 shares of common stock. They are considering issuing new debt to replace some of this equity. Maxwell currently has a beta of 2, and is considering replacing either $2 million in equity or $5 million in equity with new debt. Maxwell’s current corporate tax rate is 30%. The interest rate (rd) on $2 million of debt is 7%. The interest rate (rd) on $5 million in debt is 14%. The risk-free rate is 4% and the required return on the market is 10%. Maxwell has an EBIT of $3 million this year. Assume Maxwell has a payout ratio of 35% regardless of its capital structure and that their growth rate in earnings is 5% annually. a. What will be Maxwell’s new levered beta if it replaces $5 million in equity with debt? b. What will be Maxwell’s weighted average cost of capital (WACC) if it utilizes $5 million in debt? c. What would be Maxwell’s earnings per share (EPS) if it issued $5 million in debt? d. Assuming g=5%, what would be Maxwell’s stock price per share if it issued $5 million in debt? (Assume Maxwell just paid a dividend based on their current year earnings)
Nаme the whоle bоne seen in the picture.[bоne17] Nаme the three bones thаt fuse together to make #17.[threebones17] Name the feature indicated by the pointer.[feature19] Name the opening indicated by the pointer.[opening20]