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Buchanan Brothers anticipates that its net income at the end of the year will be $3.6 million (before any recapitalization). The company currently has 900,000 shares of common stock outstanding and has no debt. The company’s stock trades at $40 a share. The company is considering a recapitalization, where it will issue $10 million worth of debt at a yield to maturity of 10 percent and use the proceeds to repurchase common stock. Assume the stock price remains unchanged by the transaction, and the company’s tax rate is 34 percent. What will be the company’s earnings per share, if it proceeds with the recapitalization?
Consider the following table for a period of six years. Returns Year Large-Company Stocks U.S. Treasury Bills Year 1 – 15.09 % 7.37 % Year 2 – 26.59 8.03 Year 3 37.31 5.95 Year 4 24.01 5.47 Year 5 – 7.32 5.49 Year 6 6.65 7.76. Calculate the arithmeti..
Joe Ji is married to Joy Ji and have 2 children, Together they made $215,000 in 2015. Potential tax ramifications to your future clients or your practice?
How do investors in bond market assess the overall risk in the economy? What yield spread do they use.What kind signal does it send to investors in bond market?
What is the third-party-payer system in your organization? How does this system impact your organization?
What is the maximum possible dividend payout rate the firm can maintain without resorting to additional equity issues?
Describe the stages in venture capital financing. Explain the methods used to issue new securities. Describe the uses and sources of cash.
Harrison Clothiers' stock currently sells for $20 per share. The stock just paid a dividend of $1 a share. The dividend is expected to grow at a constant rate of 10% per year. What stock price is expected 1 year from now? What is the required rate of..
In addition to risk-free securities, you are currently invested in the Tanglewood Fund,
Killer Whale, Inc. has the following balance sheet statement items: total current liabilities of $885,517; net fixed and other assets of $1,698,610; total assets of $2,852,030; and long-term debt of $655,703. What is the amount of the firm’s current ..
top gun records and several movie studios have decided to sign a revenue-sharing contract for dvds. each dvd costs the
A pension plan has promised to pay out $25 million per year over the next 15 years to its employees. Actuaries estimate the rate of return on the fund's assets will be 5.50 percent. What amount of pension fund reserves (to the nearest dollar) are nee..
Hart Enterprises recently paid a dividend, D0, of $3.25. It expects to have nonconstant growth of 14% for 2 years followed by a constant rate of 4% thereafter. The firm's required return is 17%. How far away is the horizon date?What is the firm's hor..
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