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Jones Co. currently is 100% equity financed. The company is considering changing its capital structure. More specifically, Jones' CFO is considering a recapitalization plan in which the firm would issue long-term debt with a yield of 9% and use the proceeds to repurchase common stock. The recapitalization would not change the company's total assets nor would it affect the company's basic earning power, which is currently 15%. The CFO estimates that the recapitalization will reduce the company's WACC and increase its stock price. Which of the following is also likely to occur if the company goes ahead with the planned recapitalization?
The company's net income will increase, the company's earnings per share will decrease, the company's cost of equity will increase, the company's ROA will increase, or the company's ROE will decrease.
If the firm's preferred stock is NON CUMULATIVE and the 20X8 dividend declared amounts to a total of $20,000, how much will go to PREFERRED stock holders?
Assume the market portfolio has an expected return of 10% and a volatility of 20 percent, while Microsoft's stock has a volatility of 30 percent.
Galt Industries has 50 million shares outstanding & market capitalization of $1.25 billion. It also has $750 million in debt outstanding. Galt Industries has announced to deliver company by issuing new equity & completely repaying all the outstanding..
You are heading up your firm's capital investment evaluation efforts. Currently, the capital investment group is deliberating over the three investment proposals below.
Given some amount to be received numerous years in future, if the interest rate increases, the present value of the future amount will be (pick the best answer)
Suppose the following data for the BU Scholarship Investment Fund. The total investment in the fund is $1 million.
Computation of receivables collection period and leverage effect of the debt and What is times interest earned
The great grandparents of one of your classmates sold their munitions factory to government in beginning if 1898 during the Spanish-American War for 150,000.
Using the deferral method, prepare a statement of revenues and expenses and a statement of changes in net assets for Wise Owls for 20X1.
Calculation of a proposal to buy a new milling machine using NPV and What is the net cost of the machine for capital budgeting purposes
Computation of profit margin and EBITDA coverage ratio and The firm had no amortization charges
A court settlement awarded an accident victim four payments of the $50,000 to be paid at the end of each of next four years.
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