Company A’s capital employed and its adjusted profit is $800m and $500m respectively. Its target capital structure is 75% equity 25% debt. The cost of equity is 18% and pre-tax cost of debt is 12%. What is the value of EVA using Economic Value Added approach?
举一反三
- The average of a firm's cost of equity and after tax cost of debt that is weighted based on the firm's capital structure is called the: A: reward to risk ratio B: weighted capital gains rate C: structured cost of capital D: weighted average cost of capital
- The value of a firm is maximized when the A: cost of equity is maximized. B: tax rate is zero. C: levered cost of capital is maximized. D: weighted average cost of capital is minimized.
- Which one of the following terms is defined as the mixture of a firm's debt and equity financing? A: cash management B: cost analysis C: capital structure D: working capital management
- Net income is $500m, depreciation is $100m, capital expenditures and debt repayment is $50m and $150m respectively. What is the amount of free cash flow to equity?
- The capital structure that maximizes the value of a firm also: A: minimizes financial distress costs. B: minimizes the cost of capital. C: maximizesthe present value of the tax shield on debt. D: maximizes the value of the debt.