Business

FinanceQ&A LibraryYou are a management trainee in one of the Manufacturing companies based in Johor, Malaysia. The company was established in 2003 and recently has been listed in Bursa Malaysia. Currently, the debt-equity ratio of the company is 0.30. Your CFO's role demands him to maximize the value of the firm. Your CFO asked you that is there an easily identifiable debt-equity ratio that will maximize the value of a firm? Why or why not? He gave you a couple of days to answer this question. You need to support your answers with examples.Start your trial now! First week only $4.99!*arrow_forward*

Question

You are a management trainee in one of the Manufacturing companies based in Johor, Malaysia. The company was established in 2003 and recently has been listed in Bursa Malaysia. Currently, the debt-equity ratio of the company is 0.30. Your CFO's role demands him to maximize the value of the firm. Your CFO asked you that is there an easily identifiable debt-equity ratio that will maximize the value of a firm? Why or why not? He gave you a couple of days to answer this question. You need to support your answers with examples.

Tagged in

Business

Finance

Find answers to questions asked by students like you.

Q: You are a management trainee in one of the Manufacturing companies based in Johor, Malaysia. The com...

A: It is extremely hard to measure financial cost and other direct and indirect costs; consequently dis...

Q: Camber Corporation has to decide if they can finance purchasing 10 new machines for all their manufa...

A: 1.The original cost per machine is $1,730,000 and the overall cost needed to buy 10 machines is as f...

Q: How much will I need to deposit into an account to have $6,500,000 in 10 years earning 5 % compounde...

A: Present value can be defined as the amount which is to be set aside in order to have a pre-defined s...

Q: Assume ABC shares have a market capitalization of $50 million. The company is expected to pay a divi...

A: WACC refers to weighted average cost of capital. It is the rate that a firm needs to pay (on an aver...

Q: find the interst periodic deposit 4000 rate .055 time 40 years

A: Assumption:It is assumed that the periodic deposit of $4,000 is compounded annually at the rate of 5...

Q: Chrome Co. borrows $1,665,000 at an interest rate of 7.32% APR monthly with equal monthly payments o...

A: Calculation of Loan Balance in Month 36:The loan balance in month 36 is $1,460,033.76.Excel Spreadsh...

Q: Last year, Hassan’s Madhatter, Inc. had an ROA of 5.8 percent, a profit margin of 18.50 percent, and...

A: Basic FrameworkROA = Net income / Total assets = Sales x Profit Margin / Total AssetsHence, Total as...

Q: Produce a projected capital budgeting cash flow statement for the Sneaker 2013 project Answer the fo...

A: To calculate net cash flows, one needs to ascertain net income. Following steps have been attached t...

Q: the effects of increasing the amount paid upfront when corporations make capital purchases with a fo...

A: Capital expenditure is an expense, that generates profits for a longer period of time which can be m...

Q: Kopperud Electronics has an investment opportunity to produce a new HDTV. Therequired investment on ...

A: Inflation Rate = 4%Price of Product in 1st Year = $471Price of Product increases by 4% every year be...

Q: You lent $290 to a friend for one year at a nominal rate of interest of 3 percent. Inflation during ...

A: Real interest rate is the real return earned on the amount lent which can be calculated by using fis...

Q: Camber Corporation has to decide if they can finance purchasing 10 new machines for all their manufa...

A: a)Calculation of annual payments:Answer:The annual payment is $3,417,453.45.The actual cost of each ...

Q: What is the annual opportunity cost of a checking account that requires a $300 minimum balance to av...

A: Opportunity cost is the potential loss of income on the amount invested in the checking account as m...

Q: A manager has determined that a potential new product can be sold at a price of $50 each. The cost t...

A: Selling Price = $50Variable Cost (Production Cost of Product) = $35Fixed Cost (Lease of necessary eq...

Q: Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and financin...

A: Calculation of original loan paid off:The original loan paid off is $16,572.Excel Spreadsheet:

Q: How much should chuck invest semiannually in his ira to have $250,000 in it when he retires in 25 ye...

A: Semi-annual compound interest is the interest which is added to the principal amount twice in a year...

Q: A proposed new project has projected sales of $222,000, costs of $96,500, and depreciation of $26,10...

A: The computation of operating cash flow is as follows:

Q: Suppose that some commercial bank has $100M in deposits and $20M in capital. Assuming a 10% minimum ...

A: Calculation of maximum amount of loan and securities bank can hold:Answer:The maximum amount of loan...

Q: Which of the following is a reason that banks may favor fee compensation over balance compensation? ...

A: In order to increase their deposits and use them for loan, banks usually prefer fee compensation rat...

Q: 3. Your client has a 2-year old child whose college education they plan to fund when the child turns...

A: First calculate the lump sum amount needed at the start of college. This lump sum can be calculated ...

Q: Need help with cost savings

A: Computation of operating cash flow:The NPV will be zero when the firm is indifferent among accepting...

Q: Expected Return, Variance, Std. Deviation and Cofficient of Variation:Magee Inc.'s manager believes ...

A: The expected return Re is as shown on the white board. Pi = Probability of state i; Ri is the return...

Q: I am having some trouble with a similar problem except in this problem you have to determine the dis...

A: The discount rate refers to the interest rate charged on the 200 day note.

Q: Critically discuss the effect of increasing the amount paid upfront when corporations make capital p...

A: Capital purchases refer to the expenses a company makes for buying new equipments, improving long te...

Q: You are a management trainee in one of the Manufacturing companies based in Johor, Malaysia. The com...

A: The future cash flows and the discount rate are the two factors on which the value of the firm relie...

Q: How much is a share of Bama Corporation stock expected to be worth one year from now, if you pay $80...

A: According to the information provided, the stock has a current market price of $80, with a dividend ...

Q: You have $42,180.53 in a brokerage account, and you plan to deposit an additional $5,000 at the end ...

A: The future value of annuity helps an investor or an individual to know the future value of their pre...

Q: Atlantic Corporation is the largest logging company in the north eastern part of the United States. ...

A: Last years dividend = D0 = $ 5 per shareGrowth rate in dividend, g = -5%Ke = the required rate of re...

Q: Cash flows estimation and capital budgeting: You are the head of finance department in XYZ Company. ...

A: NPV refers to the net present value of an investment. It is calculated as the present value of futur...

Q: Imprudential, Inc., has an unfunded pension liability of $582 million that must be paid in 20 years....

A: To find out the value of the pension liability, the amount will be simply discounted to its present ...

Q: At age 18, Marcia started depositing $2000 per year at the end of each year into an account earning ...

A: Annuity, A = $ 2,000Rate of interest = r = 12%number of annuities, n = 8

Q: Find internal rate of return of a project with an initial cost of $43,000, expected net cash inflows...

A: We can find the internal rate of return for a stream of constant cash flows using RATE function of e...

Q: What is internal Rate of Return - Before Tax Cash Flow - BTIRR? Please provide example.

A: Before tax IRR (BTIRR) is the IRR calculated on the before tax cash flows. Here, the before tax cash...

Q: You are a management trainee in one of the Manufacturing companies based in Johor, Malaysia. The com...

A: As a management trainee, the answer for the CFO question will be that it is not easy to identify a d...

Q: Brockman Corporation just paid a dividend of $2.00. The dividend is expected to grow at a constant r...

A: Computation of current price of stock:The intrinsic value or current price of stock is $74.67.Formul...

Q: Approximately how many years are needed to double a $100 investment when interest rates are 5.50 per...

A: Future value is the value of the asset at a particular time. The present value of the asset when bei...

Q: Barry Inc. is considering a project that has the following cash flow and WACC data. What is the proj...

A: We will make use of the MIRR function of excel to get the desired MIRR

Q: If the Rhine Company ignores the possibility that other firms may enter its market, it should set a ...

A: Calculation of Present values when Selling Price of the unit is $10,000 and Firms enter into the ma...

Q: What is Internal Rate of Return - Variable Cash Flows with Reversion? Please provide examples.

A: The internal rate of return is the one of the discounted techniques of capital budgeting which is us...

Q: Your full-service brokerage firm charges $195 per stock trade.How much money do you receive after se...

A: Calculate the amount to be received as follows:

Q: A family spends $46,000 a year in living expenses.If prices increase 3% a year for the next 3 years ...

A: The value of the asset that is expected to be in future due to specified growth rate is known as fut...

Q: A metallurgical engineer decides to set aside money for his newborn daughter's college education. He...

A: Let’s assume the engineer deposits X for one year for 14 years:

Q: You are considering the purchase of real estate that will provide perpetual income that should avera...

A: Calculate the rate of return on market portfolio as follows:Rate of return on market portfolio is sa...

Q: Please show all equations and work as needed. Make the correct answer clear. If possible, please typ...

A: Note: Calculations are typed as requested for your convenienceThe company has issued 6 million share...

Q: An analyst uses a two-stage variable growth model to estimate the value of Old Maid Company's common...

A: Part A-E:Excel Spreadsheet:

Q: Year Project A Project B 0 –$ 51,000 –$ 66,000 1 31,000 30,000 2 26,0...

A: NPV refers to the net present value of a project or investment. The formula used to determine NPV of...

Q: A protective covenant in a bond indenture: Group of answer choices A. protects the borrower from ...

A: Bond covenant is the legal agreement between bond issuer and bond holder which consists of all terms...

Q: If $800 is invested for one year at 6% compounded quarterly, the amount of interest earned is -----...

A: Principal, P = $ 800Interest rate is 6% compounded quarterlyHence, r = 6%, m = frequency of compound...

Q: Calculate how much you will have to save each month between now and then to have $300,000 in your re...

A: Calculate the monthly saved amount as follows:

Q: Thelma and Louie, Inc. started the year with a balance of retained earnings of $545 million and ende...

A: O = Opening balance = $ 545 mnC = Closing balance = $ 590 mnTotal dividends paid = $35 million to th...