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Question: In Problem, if the 1,500,000 additional shares can only be issued at $28 per share and the company can earn 10 percent on the proceeds, should the new issue be undertaken based on earnings per share?
Problem: American Health Systems currently has 6,000,000 shares of stock outstanding and will report earnings of $15 million in the current year. The company is considering the issuance of 1,500,000 additional shares that will net $50 per share to the corporation.
a. What is the immediate dilution potential for this new stock issue?
b. Assume that American Health Systems can earn 12 percent on the proceeds of the stock issue in time to include them in the current year's results. Should the new issue be undertaken based on earnings per share?
In December, the price of Christmas trees rises and the quantity of trees sold rises. Is this a violation of the law of demand?
The maturity risk premium is 0.10 percent on 4-year securities and increases by 0.03 percent for each additional year to maturity. Calculate the default risk premium on Nikki G's 10-year bonds.
The initial outlay associated with the expansion would be $1,950,000, and the project would generate free cash flows of $450,000 per year for six years. The appropriate required rate of return is 9 percent.
ABC Corp.'s projected capital budget is $2,000,000, its target capital structure is 60% debt & 40% equity and its forecast net income is $600,000. If the company follows a residual dividend policy, what is the amount of total dividends in dollars ..
Maxwell Mining Company's ore reserves are being depleted, so its sales are falling. Also, because its pit is getting deeper each year, its costs are rising.
You are given the following information for Calvani Pizza Co.: sales = $51,000; costs = $21,700; addition to retained earnings = $10,250; dividends paid = $800; interest expense = $4,100; tax rate = 35 percent. Calculate the depreciation expense.
What is the current yield on the bond?
Based on this case and the two previous Graeter's cases, what are the company's most important strengths? Can you identify any weaknesses that might affect its ability to grow?
Determine the NPV for both projects using a cost of capital of 13% 2. Determine the NPV for both projects using a cost of capital of 8% 3. At an 8% discount rate, which project should be accepted? at 13% discount rate, which project should be acce..
capm and capital budgeting decision. the taylor corporation is evaluating some new capital budgeting projects. their
The security lasts for 10 years. Another security of equal risk also has a maturity of 10 years, and pays 10 percent compounded monthly (that is, the nominal rate is 10 percent). What should be the price of the security that you just purchased?
Expected return Standard deviation Correlation coefficient
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