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Introduction to Corporate Finance Study Set 2

Business

Quiz 8 :

Company Cost of Capital

Quiz 8 :

Company Cost of Capital

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Which of the following is needed to determine a company's weighted average cost of capital?
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Multiple Choice
Answer:

Answer:

D

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Assuming an imputation tax system,calculate the cost of equity capital for XHZ Ltd assuming the market and XHZ both pay fully franked dividends,which are fully utilised by shareholders,the beta of XHZ is estimated to be 1.3.The yield on a 10- year bond is 5.4 per cent and the market risk premium,including the value of franking credits,is estimated to be 6.3 per cent.
Free
Multiple Choice
Answer:

Answer:

B

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TEC Pty Ltd has the following information on its balance sheet and income statement: img What is the estimated cost of debt for TEC Pty Ltd for the financial year 2005/2006?
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Multiple Choice
Answer:

Answer:

B

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The rate of return a company must earn to maintain its value is:
Multiple Choice
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HyPo Ltd has estimated its cost of debt in 2005 using net interest/average net debt to be 8.45 per cent.The 10- year bond yield was 6.50 per cent in 2005 and 6.95 in 2006.Using a risk premium approach,what would be the estimation of the firm's current cost of debt?
Multiple Choice
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Under an imputation tax system,what will be the dividend after tax on $100 of income generated by a company when 100 per cent of the after- tax income is paid out to the shareholder as a fully franked dividend and the shareholders personal average tax rate is 30 per cent? The company tax rate is 30 per cent.
Multiple Choice
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Under an imputation tax system the tax credits received for the amount of tax paid at the company level are known as what?
Multiple Choice
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On 30 June Geelong Piping Ltd paid a dividend of 40 cents per share that was fully franked.If Geelong Piping Ltd 's share price on 30 May was $4.18 and had fallen to $3.87 by the end of June,what is the gross return after company tax but before personal tax for a shareholder on the top marginal tax rate of 47 per cent?
Multiple Choice
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Which of the following professionals is involved in the process of valuing companies?
Multiple Choice
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Which of the following is the correct denominator to use in the equation when using a company's book value of debt to estimate the cost of debt?
Multiple Choice
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What will be the average tax rate of a taxpayer under the graduated scale tax system below if their taxable income is $100,000? img
Multiple Choice
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Under an imputation tax system,what will be the shareholder's personal tax liability on $1 of income generated by a company,when 100 per cent of the after- tax income is paid out to the shareholder as a fully franked dividend and the shareholder's personal average tax rate is 47 per cent? The company tax rate is 30 per cent.
Multiple Choice
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On 30 June Samsonite Resources NL paid a dividend of 10 cents per share that was fully franked.If Samsonite Resources NL's share price on 30 May was $1.58 and had increased to $1.87 by the end of June,what is the gross return after company tax but before personal tax for a shareholder on the top marginal tax rate of 47 per cent?
Multiple Choice
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Pacific Travel Group Ltd has determined that its outstanding bonds are currently priced at $104.50 in the marketplace.These bonds will mature in exactly one year's time and pay an annual coupon rate of 10%.The face value of the bonds is $100.This is the only form of debt financing used by the firm.What is the implied cost of Pacific Travel Group's debt?
Multiple Choice
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The shareholders and debtholders of Antiquities Corporation have invested $4 million and $12 million respectively.The debtholders charge an interest rate of 10 per cent whilst the shareholders require a return of 15 per cent.What is the company cost of capital?
Multiple Choice
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When comparing the CAPM and Gordon's constant growth model to calculate the cost of equity,we find:
Multiple Choice
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Under an imputation tax system,what will be the dividend after tax on $500 of income generated by a company when 100 per cent of the after- tax income is paid out to the shareholder as a fully franked dividend and the shareholder's personal average tax rate is 35 per cent? The company tax rate is 30 per cent.
Multiple Choice
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Under the imputation tax system,what will be the grossed up value of a $1 cash dividend that was paid fully franked.The company tax rate is 30%.
Multiple Choice
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The shareholders of Innovative Technologies Ltd (ITL)have invested a total of $3 million and require a return of 15 per cent.The debtholders of ITL have invested $20 million and charge an interest rate of 9 per cent.Which of the following is the total return required by the company's capital providers?
Multiple Choice
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Under an imputation tax system,what will be the dividend after tax on $1 of income generated by a company when 100 per cent of the after- tax income is paid out to the shareholder as a fully franked dividend and the shareholder's personal average tax rate is 47 per cent? The company tax rate is 30 per cent.
Multiple Choice
Answer:
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