EBIT of X Ltd is $75,000, cost of debt is 10% and debt

Strategic Financial Management

Q1. EBIT of X Ltd is $75,000, cost of debt is 10% and debt is $200,000. The overall cost of capital is 12%. Calculate the value of the firm and the cost of Equity.

Q2. Following is the information drawn from Y Ltd.

Sales Revenue Rs 1,50,000

(–) Operating Cost Rs 40,000

(–) Interest Cost Rs 20,000

Earning before tax Rs 90,000

(–) Tax (30%) Rs 27,000

Earning after tax Rs 63,000

Equity = Rs 70,000

Cost of equity= 15%

Debt = Rs 30,000

Cost of debt = 12%

Determine Economic Value Added.

Q3. Calculate Weighted average cost of capital from following information

 

 

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EBIT of X Ltd is $75,000, cost of debt is 10% and debt

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EBIT of X Ltd is $75,000, cost of debt is 10% and debt