Answer:
The projects which maximize Vanguard's shareholder wealth are Project A; Project B; Project D.
Explanation:
Projects which maximize the shareholder value are projects delivering Expected Returns which are higher than its risk-adjusted weighted average cost of capital (WACC).
As a result, Project A with Expected return of 15% and risk adjusted WACC of 12%; Project B with Expected return of 12% and risk adjusted WACC of 10%; Project D with Expected return of 9% and risk adjusted WACC of 8%; are the projects that maximize the shareholder's value.
On the other hand, Project C with Expected return of 11% and risk adjusted WACC of 12% is harmful to shareholder value.
Answer:
$69,840
Explanation:
Data provided;
Month Budgeted Sales
January $120,000
February $108,000
March $132,000
April $144,000
Gross profit rate is 40% of sales it means cost of goods sold is 60% of sales
Target ending inventory levels = 30% = 0.3
Therefore,
Purchases budgeted for January total
= ( $120,000 × 0.6 ) + ( $108,000 × 0.6 × 0.3 ) - $21,600
= $72,000 + $19,440 - $21,600
= $69,840
Answer:
The amount of the change in the earnings per share as a result of this change in the capital structure will be $0.16
Explanation:
all equity equity and debt
expected EBIT $600 $600
interest (-) ($192)
profit before tax $600 $408
tax (-) (-)
earnings to equity share holders $600 $408
number of equity sahes 500 300
earnings per share $1.20 $1.36
change in the earnings per share = $1.36 - $1.20
= $0.16
Therefore, The amount of the change in the earnings per share as a result of this change in the capital structure will be $0.16
