-g. Last year, Bonhard Boatyard Inc, had $10million in EBIT ate. Their , and fac
ID: 2796421 • Letter: #
Question
-g. Last year, Bonhard Boatyard Inc, had $10million in EBIT ate. Their , and faced 40%,of tax r of capital yields a positive Economic value adde proximately $40million. Which of the following after-tax cost 22.5% 15.3% a. b. 8.90% None of the above d. e. -10. A firm has a debt-equity ratio of 62%, atotal asset turnover of 124 and a prof tmargin of 5.1%. The total eguity is $489,600. What is the amount of the net income? USE AT LEAST 4 DECIMAL PLACES a. $19,197 b. $50,159 c. $40,451 d. $28,079 e. $52,418 11. Bonner Metals currently has 9% annual cupo ond ontemarketthat sell for 859. re in 16 years. What is the yield to maturity (YTM) on this bond? (Assume face and matu value of the bond is 1,000) a. 11.79% b. 10.90% c. 19.83% d. 8.75% e. 9.28%Explanation / Answer
9.
NOPAT = EBIT × (1 - Tax rate)
= $10 × (1 - 40%)
= $6 million.
NOPAT of company is $6 million.
Total Capital injected = $40 million
Cost of capital For positive EVA = $6 / $40
= 15%
Any cost of capital below 15% will provide positive EVA for company.
So, cost of capital of 8.90% is correct answer.
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