Grayson\'s Co has the following in its Cash Budget: 1.44M 1.72M 1.80 M Other $ 1
ID: 2764608 • Letter: G
Question
Grayson's Co has the following in its Cash Budget: 1.44M 1.72M 1.80 M Other $ 1.72M 2.0M 1.36M Other $ New Kings Service. Inc. has a debt ratio of 50% and an equity multiplier of 2. What is Ness Kings' stockholders' equity if total debt is $100,000? $100,000 $150,000 $200,000 $50,000 Oilwell Services, Inc. are interested in a small company, and they Good Buy Company might be a good investment target. You has been given the following information and the Oilwell Services would like to know the return on stockholder's equity. Assume Good Buy's marginal tax rate b 40% and you are given the following additional information about Good Buy The return on equity (ROE) is: 12% 0% 15% 18% 14%Explanation / Answer
22. b. $ 1.72 M
23. c. 1.36 M
24. a. $ 100,000
If Debt ratio is 50%, and if total debt is $ 100,000, Total assets = $ 200,000. Equity Multiplier = Total Assets / Equity = 2. Hence Equity is $ 100,000.
25. d. 18%
Net income = $ 3,000,000 x ( 1-0.40) = $ 1,800,000
ROE = Net income / Total stockholders' equity = 1,800,000 / 10,000,000 = 18%
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