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Tartan Industries currently has total capital equal to $5 million, has zero debt, is in the 40% federal-plus-state tax bracket, has a net income of $2 million, and distributes 40% of its earnings as dividends. Net income is expected to grow at a constant rate of 5% per year, 120,000 shares of stock are outstanding, and the current WACC is 13.20%.
The company is considering a recapitalization where it will issue $1 million in debt and use the proceeds to repurchase stock. Investment bankers have estimated that if the company goes through with the recapitalization, its before-tax cost of debt will be 11% and its cost of equity will rise to 15.5%.
What is the stock's current price per share (before the recapitalization)? Round your answer to the nearest cent. Do not round intermediate steps.
$
Assuming that the company maintains the same payout ratio, what will be its stock price following the recapitalization? Assume that shares are repurchased at the price calculated in part a. Round your answer to the nearest cent. Do not round intermediate steps.
Toliara operates? two-eight hour shifts per day. Downtime for? lunches, breaks and equipment? set-ups equals a total of 1.50 hours for the 24 hour operating day. Annual customer demand is? 69,310 units and Toliara operates 239 days per year. ?Toliara..
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Corn 5,000 bushels Contract Month Open High Low Settle Chg Open Int Mar 455.125 457.000 451.750 452.000 −2.750 597,913 May 467.000 468.000 463.000 463.250 −2.750 137,547 July 477.000 477.500 472.500 473.000 −2.000 153,164 Sep 475.000 475.500 471.750 ..
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Hastings Corporation is interested in acquiring Vandell Corporation. Vandell currently has a cost of equity of 10%; 25% of its financing is in the form of 6% debt, and the rest is in common equity. Its federal-plus-state tax rate is 38%. After this, ..
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The coupon interest rate is 9%; and the yield to maturity is 6%. What is the bond's current market price?
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