Financial Management & Post Graduate Diploma in Business Administration - Business, Kyana Solutions Capital Structures - Business Assignment Assignment

Assignment Task

Assignment Question
1. Kyana Solutions is looking at two different capital structures, one an all-equity firm, and theother a levered firm with $2 million of debt financing at 8% interest. The all-equity firm will havea value of $4 million and 400,000 shares outstanding. The levered firm will have 200,000 shares outstanding.
Question:
i) You are required to find the break-even EBIT for Kyana Solutions using EPS if there are no corporate taxes.
ii) You are required to find the break-even EBIT for Kyana Solutions using EPS if the     corporate tax rate is 30%.
iii) You are required to briefly explain on these two break-even EBITS for Kyana Solutions. 

2. Kyana Solutions has just set the company dividend policy at $0.50 per year. The company planson being in business forever. With the arrival Covid 19 there is a growing awareness on managingfinance for future use. Among those are on the stock trading in the stock markets. The MaintainDirector of Kyana Solutions knows that there are two types of markets namely primary market and the secondary market and further seeks your expert advice.
Question:
i) You are required to calculate the price of this stock if an investor wants:
(a) 5% return, b) 10% return and (c) 20% return.
ii) You are required to explain the two types of markets with suitable examples with special
reference to bear market and bull market.
iii) You are required to comment on the function of a specialist in the secondary market.
iv) You are asked to differentiate common stock from preferred stock.

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