User Account

All Pages

How come the share price

Assignment Help Finance Basics
Reference no: EM132103803

Mercer Corp. is a firm with 10 million shares outstanding and $84 million worth of debt outstanding. Its current share price is $73. Mercer's equity cost of capital is 8.5%. Mercer has just announced that it will issue $354 million worth of debt. It will use the proceeds from this debt to pay off its existing debt, and use the remaining $270 million to pay an immediate dividend. Assume perfect capital markets.

a. How come the share price doesn't drop when new debt is taken on?

Reference no: EM132103803

Questions Cloud

What is marketing discipline : What is marketing discipline? What is most people's perception of marketing discipline?
What is the amount of the purchase discount recorded : If Kari paid for the purchase on May 9th, how much cash was exchanged and what is the amount of the purchase discount recorded
How do the problems faced by janice illustrate connections : How do the problems faced by Janice illustrate connections between biological, psychological and social systems?
What is the net present value of the project : This schedule includes all cash inflows from the project, which will also require an immediate $215,000 cash outlay. What is the net present value of project
How come the share price : a. How come the share price doesn't drop when new debt is taken on?
How are the articles complementary and contradictory : Briefly (!) describe the sample and the research design/type of data. What were the major findings? Was the hypothesis supported?
Discuss the relevant costs you would consider : Pretend you are a manager of Coca-Cola. Discuss the relevant costs you would consider for this decision as well as irrelevant costs and sunk costs
What are the net sales : B&B Lumber reports gross sales of $80,000. If sales returns and allowances are $20,000 and sales discounts are $3,000, what are the net sales
What is the contribution margin per hour : Plentygood Company provides two levels of advising services. What is the contribution margin per hour for the Basic service

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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