a) Differentiate between short-term and long-term lease.
b) Given: Need $72 million for new investments; Target capital structure D/E =3/4;
Net Income = $75 Million. Find out the amount of dividends that can be paid under
a Residual Dividend Policy?
c) Based on M & M with taxes and without taxes, how much time should a financial manager spend analyzing the capital structure of their firm? What if the analysis is based on the static theory which takes into account the financial distress cost?
d) ABC Inc’s total value of capital is $4,500,000. Its cost of Equity is 15 percent and the cost of debt is 8 percent. Its capital structure is $2,500,000 in Equity and $2,000,000 in debt. What is its WACC?