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Kong Ltd is a home appliance manufacturer listed on the local stock exchange. The company has no debt but has 100 million shares with a current price $10 per share. The company would like to change its capital structure by borrowing $300 million and repurchasing shares. The restructure plan is announced to the market and shareholders expect the change in debt to be permanent
(i). Assume the market is perfect so all the assumptions of Modigliani and Miller (MM) theorey hold. Calculate the value of the firm and the value of equity after the proposed share repurchase.
(ii). Assume the market is imperfect and the only imperfections are corporate taxes and financial distress costs. Kong pays corporate taxes of 40%. If the share price of Kong Ltd increases to $10.6 immediately after the announcement of the capital restructure plan, what is the present value of financial distress costs Kong will incur as the result of the debt?
On November 28, 2012, Shocker receives a $3,000 payment from a customer for services to be rendered evenly over the next three months.
For this final SLP, choose an organization that you currently work for or have worked for in the past. You will be applying the concepts of organizational culture that you read about in the background materials to this organization.
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you are a small business owner and you have the opportunity to expand your facility which will increase your
1. you have really enjoyed the early years of your working life just turned 45 and have saved zero for retirement.nbsp
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what kinds of u.s. companies would benefit most from a stronger dollar in the foreign exchange market?
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