User Account

All Pages

Differences between recourse and non-recourse lending

Assignment Help Financial Accounting
Reference no: EM133016897

Question-

a) Explain the differences between recourse and non-recourse lending and outline when each could be used in project finance.

b) Briefly explain the economic benefits of a share buy-back from the perspective of a company.

c) Memphis Ltd is currently undergoing an equal access share buy-back scheme. The market price of Memphis Ltd is $10.00 per share. The off-market buy back price was announced at $9.50 per share, where the capital component of the offer is $3.50 per share and a fully-franked dividend is $6.00 per share. Corporate tax rate is 30 percent. A hedge fund, Luxor LLC, has recently become a shareholder in Memphis Ltd by acquiring a 3.5 percent ownership in Memphis Ltd. Luxor LLC has also rejected participating in this buy back scheme at the current share price. Luxor LLC however made a counter offer to Memphis Ltd last Monday to tender all its shareholdings in Memphis Ltd at the price of $10.10 per share. Luxor LLC has then been accused of 'green mail' by Memphis Ltd management.

Discuss the following:

i. Outline possible reasons why Memphis Ltd management accused Luxor LLC of 'green mail'.

ii. Advise a domestic retail shareholder (who has a marginal tax rate of 32.5 percent) and a superannuation fund (15 percent tax rate) whether either of them should participate in Memphis Ltd's Equal Access share buy back. Assume that shares in Memphis Ltd were bought by the retail investor and the superannuation fund more than a year ago at a price of $3.50 per share.

Reference no: EM133016897

Questions Cloud

What balance of retained earnings does the firm report : What balance of retained earnings does the firm report after applying the stock repurchase under the a) Treasury Stock (Cost) Method b) Direct Retirement method
How much is paid to common shareholders : In the current year, Dr. Jones declares and pays dividends of $50,000. How much is paid to common shareholders
What is the noncontrolling interest''s share of rockne income : Sales to Doone amounted to $390,000 in 2020 and $490,000 in 2021. What is the noncontrolling interest's share of Rockne's 2021 income
Determine the zs adjusted capital before the admission : Determine (1) the Z's adjusted capital before the admission of A; and (2) the amount cash investment by A
Differences between recourse and non-recourse lending : Explain the differences between recourse and non-recourse lending and outline when each could be used in project finance
Calculate inflation-adjusted cost of restoration expected : Anticipating that inflation will average 2 per cent annually over next 5 years, calculate the inflation-adjusted cost of restoration expected in 5 years time
What is the optimal provision of the public good : What is the optimal provision of the public good? Illustrate your answer with a graph and Replacing the system of agricultural price supports with a system
Calculate and prepare cash flows from operating activities : For the year ended 30 June 2021, Rad Ltd recorded a Profit after tax of $32,000. Calculate and prepare Cash Flows from Operating Activities
Whether sufficient appropriate audit evidence obtained : Explain whether sufficient appropriate audit evidence has been obtained for each of the above situations. Give reasons for your answer

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd