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A firm has equity with market value $100 million and debt with market value at $70 million. The debt pays perpetual expected coupons of $3.5 million annually. The above numbers are prior to a stock buyback being announced.
The firm uses some of its cash buyback stock on of $20 million. As a result of the fall in its cash, the expected coupon payment to debt reduce to $3.4 million (expected payments is the probability weighted future coupons, and the probability that in some future states of the world the firm would default has increased due to the the stock buyback). Also the rate of discount Rd for expected coupons paid to debt rises to 5.10%.
Assume Modigliani-Miller is true (which also means there are no taxes).
What will be the value of Equity after the stock buyback? (Do not include the $20 million that is paid to the Equity holders.)
What is the limitation of using point estimates of exchange rates within the capital budgeting analysis?- Explain how simulation can be used in multinational capital budgeting?
The Dunn Corporation is planning to pay dividends of ?$540,000. There are 270,000 shares? outstanding, and earnings per share are ?$4
Computers and More, Inc. has a market-to-book ratio of 3.5, net income of $84,000, a book value per share of $20.16, and 60,000 outstanding shares.
Japan's continuously compounded risk-free rate is at: 0.15%. Calculate the 7-month forward exchange rate.
A firm has $20 million of debt and $30 million of preferred stock. It has an expected free cash flow (FCF) of $3 million at the end of period 1 and $20 million.
shapland inc. has fixed operating costs of 500000 and variable costs of 50 per unit. if it sells the product for 75 per
This new growth strategy will require the company to reinvest 30% of their earnings starting at the end of this year (t = 1).
Make a copy of given Figure. On it, show how an Internet-enabled supply chain would connect to the process.
Determine the firm’s expected free cash flow to equity (FCFE) per share next year under these suppositions?
Suppose the real rate is 1.9 percent and the inflation rate is 3.4 percent. What rate would you expect to see on a Treasury bill?
1. Which one of the following statements about trade blocs is correct?
if the marr is 12 compute the value of x that makes the two alternatives equally desirable.abcost8001000uniform annual
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