4 (a) A company may choose to finance its activities mainly by equity capital, with low borrowings (low gearing) or byrelying on high borrowings with relatively low equity capital (high gearing).Required:Explain why a highly geared company is generally mo

题目

4 (a) A company may choose to finance its activities mainly by equity capital, with low borrowings (low gearing) or by

relying on high borrowings with relatively low equity capital (high gearing).

Required:

Explain why a highly geared company is generally more risky from an investor’s point of view than a company

with low gearing. (3 marks)

更多“4 (a) A company may choose to finance its activities mainly by equity capital, with low borrowings (low gearing) or byrelying on high borrowings with relatively low equity capital (high gearing).Required:Explain why a highly geared company is generally mo”相关问题

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(ii) State the taxation implications of both equity and loan finance from the point of view of a company.(3 marks)

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第2题

Term borrowings are used to finance the borrowers to purchase buildings and equipment needed, working capital and existing obligations.A．RightB．WrongC．Doesn't say

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第3题

The desirable properties of a marine fuel oil should include .A.high flash point and high viscosityB.low flash point and high viscosityC.low heating value and high sulphur contentD.high heating value and low sulphur content

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第4题

KFP Co, a company listed on a major stock market, is looking at its cost of capital as it prepares to make a bid to buy a rival unlisted company, NGN. Both companies are in the same business sector. Financial information on KFP Co and NGN is as follows:NGN has a cost of equity of 12% per year and has maintained a dividend payout ratio of 45% for several years. The current earnings per share of the company is 80c per share and its earnings have grown at an average rate of 4·5% per year in recent years.The ex div share price of KFP Co is $4·20 per share and it has an equity beta of 1·2. The 7% bonds of the company are trading on an ex interest basis at $94·74 per $100 bond. The price/earnings ratio of KFP Co is eight times.The directors of KFP Co believe a cash offer for the shares of NGN would have the best chance of success. It has been suggested that a cash offer could be financed by debt.Required:(a) Calculate the weighted average cost of capital of KFP Co on a market value weighted basis. (10 marks)(b) Calculate the total value of the target company, NGN, using the following valuation methods:(i) Price/earnings ratio method, using the price/earnings ratio of KFP Co; and(ii) Dividend growth model. (6 marks)(c) Discuss the relationship between capital structure and weighted average cost of capital, and comment onthe suggestion that debt could be used to finance a cash offer for NGN. (9 marks)

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第5题

Wal-Mart has been criticized by some groups for its .（）[A] low service quality[B] employees' low salary[C] high pressure on the other companies[D] discrimination against women

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第6题

In restricted visibility the speed of a vessel without operational radar may be ________ enable effective avoiding action to be taken on sighting another ship．A.too low toB.too high toC.too high forD.too low for

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第7题

In restricted visibility the safe speed of a vessel without operational radar may be ________ enable effective avoiding action to be taken on sighting another ship．A.too low toB.too high toC.too high forD.too low for

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4 (a) A company may choose to finance its activities mainly by equity capital, with low borrowings (low gearing) or byrelying on high borrowings with relatively low equity capital (high gearing).Required:Explain why a highly geared company is generally mo

题目

更多“4 (a) A company may choose to finance its activities mainly by equity capital, with low borrowings (low gearing) or byrelying on high borrowings with relatively low equity capital (high gearing).Required:Explain why a highly geared company is generally mo”相关问题

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