JTC Inc. has a capital structure consisting almost entirely of equity. - 32460

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yousafbhutta

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1.     JTC Inc. has a capital structure consisting almost entirely of equity.

 

 

2.     Utilizing the data below to answer questions 2-5

YearFinancial Data for Carbonlite & Fiberspeed

 
   

Carbonlite
   

Fiberspeed

FC per year
   

10000
   

2000

VC per bike frame
   

5
   

6

Sales price per bike frame
   

9
   

9

CM per bike frame
   

4
   

3

Last year's sales volume
   

10,000
   

10,000

EBIT
   

$30,000.00
   

$28,000.00

 

 

3.     Utilizing the data below to answer questions 2-5

YearFinancial Data for Carbonlite & Fiberspeed

 
   

Carbonlite
   

Fiberspeed

FC per year
   

10000
   

2000

VC per bike frame
   

5
   

6

Sales price per bike frame
   

9
   

9

CM per bike frame
   

4
   

3

Last year's sales volume
   

10,000
   

10,000

EBIT
   

$30,000.00
   

$28,000.00


If sales volume increases by 50%, fill out the chart below:

YearFinancial Data for Carbonlite & Fiberspeed

 
   

Carbonlite
   

Fiberspeed

FC per year
   

$12,000.00
   

$ 2,000.00

VC per bike frame
   

 
   

 

Sales price per bike frame
   

 
   

 

CM per bike frame
   

 
   

 

Last year's sales volume
   

15,000
   

15,000

EBIT
   

 
   

 

 

 

4.     Utilizing the data below to answer questions 2-5

YearFinancial Data for Carbonlite & Fiberspeed

 
   

Carbonlite
   

Fiberspeed

FC per year
   

10000
   

2000

VC per bike frame
   

5
   

6

Sales price per bike frame
   

9
   

9

CM per bike frame
   

4
   

3

Last year's sales volume
   

10,000
   

10,000

EBIT
   

$30,000.00
   

$28,000.00

 

 

 

5.     Utilizing the data below to answer questions 2-5

YearFinancial Data for Carbonlite & Fiberspeed

 
   

Carbonlite
   

Fiberspeed

FC per year
   

10000
   

2000

VC per bike frame
   

5
   

6

Sales price per bike frame
   

9
   

9

CM per bike frame
   

4
   

3

Last year's sales volume
   

10,000
   

10,000

EBIT
   

$30,000.00
   

$28,000.00


Who has more operating leverage? Why?

 

 

6.     Imagine that Lox in a Box, a chain of Kosher fast-food stores, has outstanding $80million worth of common stock on which investors require a 12% required return, $50 million outstanding in bonds on which investors requires a 9% required return, and 100,000 shares of preferred stock trading at $20 per share with a $2 per share dividend. What is the WACC?

 

7.     What are the differences in internal funding v.s. external funding?

 

8.     Discuss the differences in the classifications of long term debt.

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