Yummy Cakes started business in 2016 and has achieved good reputation in the cake industry. The company's selected income statement items and existing condensed balance sheet is given below. Sales BDT 100 Fixed Operating Expenses Current Assets Non Current Assets Total Assets Common Stock (1,000,000 shares, BDT 10 par value) Retained Earnings Total Liabilities & Owner's Equity BDT 12 million BDT 11 million BDT 14 milion BDT 25 million BDT 10 BDT 15 million BDT 25 million The company is considering expanding its business and is planning to raise an additional capital of BDT 25 million. The company is planning to raise 40% of the required capital by taking a bank loan at an interest rate of 9% and the remaining amount by issuing preferred stock of BDT 1,000 each at an annual dividend of 12%. The company is expecting that its preferred stocks would sell in the market for BDT 1,200 and the flotation cost would be 5% (the same cost at which it issued common stock). The company has been growing at 15%. Its common stocks are currently selling in the market for BDT Y (Y=14) and it paid a dividend of BDTZ last year (Z=4). The cost of goods sold is 75% of sales and the tax rate is 25%. The company also has a profitable investment opportunity of BDT 12 million, which the company plans to pursue next year. It would use 50% debt and 50% equity for financing the project. The company expects its net income to be BDT 10.5 million next year. 1. Determine the weighted average cost of capital for Yummy Cakes [10 2 Determine the degree of total leverage for Yummy Cakes marks 3. Based on your answer in number 2, what would the EBIT be sales were BOT of BDT 10 milion? 4. Determine the dividend payout ratio next year based on the residual dividend policy 5. If the company pays 10% stock dividend this year, show the changes in 15 the equity part marks! marks] 7 12 million instead 13 mark 15 Yummy Cakes started business in 2016 and has achieved good reputation in the cake industry. The company's selected income statement items and existing condensed balance sheet is given below. Sales BDT 100 Fixed Operating Expenses Current Assets Non Current Assets Total Assets Common Stock (1,000,000 shares, BDT 10 par value) Retained Earnings Total Liabilities & Owner's Equity BDT 12 million BDT 11 million BDT 14 milion BDT 25 million BDT 10 BDT 15 million BDT 25 million The company is considering expanding its business and is planning to raise an additional capital of BDT 25 million. The company is planning to raise 40% of the required capital by taking a bank loan at an interest rate of 9% and the remaining amount by issuing preferred stock of BDT 1,000 each at an annual dividend of 12%. The company is expecting that its preferred stocks would sell in the market for BDT 1,200 and the flotation cost would be 5% (the same cost at which it issued common stock). The company has been growing at 15%. Its common stocks are currently selling in the market for BDT Y (Y=14) and it paid a dividend of BDTZ last year (Z=4). The cost of goods sold is 75% of sales and the tax rate is 25%. The company also has a profitable investment opportunity of BDT 12 million, which the company plans to pursue next year. It would use 50% debt and 50% equity for financing the project. The company expects its net income to be BDT 10.5 million next year. 1. Determine the weighted average cost of capital for Yummy Cakes [10 2 Determine the degree of total leverage for Yummy Cakes marks 3. Based on your answer in number 2, what would the EBIT be sales were BOT of BDT 10 milion? 4. Determine the dividend payout ratio next year based on the residual dividend policy 5. If the company pays 10% stock dividend this year, show the changes in 15 the equity part marks! marks] 7 12 million instead 13 mark 15