Determine market price of the stock

Assignment Help Finance Basics
Reference no: EM1357382

Executive Chalk (Cheese) is financed solely by common stock and has outstanding 25 million shares with a market price of $10 a share. It now announces that it intends to issue $160 million of debt and to use the proceeds to buy back common stock.

a. How is the market price of the stock affected by the announcement?
b. How many shares can the company buy back with the $160 million of new debt that it issues?
c. What is the market value of the firm (equity plus debt) after the change in capital structure?
d. What is the debt ratio after the change in structure?
e. Who (if anyone) gains or loses?

 

Reference no: EM1357382

Questions Cloud

What minimum horsepower must a motor have : A 70 kg man (rad=0.25m) standing on a 10-kg disc (rad=0.4m) with his arms extended (rad=0.9m) holding a 15-kg weight in each hand. What is the rotational inertia of man with weights.
Elucidate the consumer surplus at the equilibrium price : Supply is the world supply. Elucidate the consumer surplus at the equilibrium price. What is the producer surplus.
Explain compensation and benefits acute care hospital : Explain Compensation and Benefits Please respond to the following - Suggest a key factor to be considered in the creation of a competitive compensation
Design-program and implement pcs system : You are hired to design, program and implement the PCS system which management calls the Sales and Inventory Management System.
Determine market price of the stock : Executive Chalk is financed solely by common stock and has outstanding twenty-five million shares with a market price of $10 a share. It now declared that it intends to issue $160 million of debt and to use the proceeds to buy back common stock.
Phobias through classical and operant conditioning : Explain what extinction means and how it is achieved in both classical and operant conditioning.
Find magnitude of acceleration of the boy toward the girl : A hunter aims directly at a target (on the same level) 113 m away. If the bullet leaves the gun at a speed of 255 m/s, by how much will it miss the aim.
Show what you want to be measured by analyzing ksao : you should show what you want to be measured by analyzing KSAO's from the job description and the information on organizational culture in the case.
Self-performance appraisal - human resources : Accomplishments: Explain any accomplishments achieved by the employee since the last review. What contributions did the employee make this year? Did employee meet goals set forth during last review?

Reviews

Write a Review

Finance Basics Questions & Answers

  Determine the economic order per quantity

Knoxville Accountants LLP consumes 100,000 packets of plain copier paper yearly. The usage is roughly steady throughout the year. The carrying expenses of this inventory is $2.00 per unit average inventory per year.

  Information about employee rights

What positive benefits could follow from a company's willingness to tolerate employee questions and criticisms about its actions and policies? How might a company best promote constructive discussion of these issues, especially as they relate to e..

  Calculate the financing cost

An MNE issues 10 year bonds denominated in 500,000 Philippines pesos (PHP) at par. The bonds have a coupon rate of 15 percent. If the peso remains stable at its current level of $.025 over the lifetime of bonds

  Compute the stock price change

Company Z stock is trading at $30 per share given that the risk free interest rate is 9 percent and the equilibrium risk premium on the market portfolio is 8 percent.

  Based on \bond ratings of jp morgan chase

Based on the bond ratings of JP Morgan Chase provide a brief debt outlook of company and a recommendation of buy, sell or neutral on the company's bonds.

  Determine the expected return on the market

A stock has an expected return of 13%, its beta is .55, and the risk-free rate is 7.15%. Determine the expected return on the market?

  Computation of payback period

Computation of Payback period and what is the payback period for a $20,000 project expected to return $6,000 for the first two years and $3,000

  Reorganization and liquidation-bankruptcy

A business can be liquidated for $700,000, or it can be reorganized. Reorganization would need an investment of $400,000.

  Explain difference to a local investment club gathering

The stock of Lansing Company has a beta of 1.2. Lansing earned an annual return of 14% during a period when the return on the market portfolio was 12.5%.

  Control theory

Control theory originated with aim of managing small, mechanical operations but it has since been applied in broader contexts. For this assignment, select a service operation.

  Calculation of risk for portfolio

Suppose ABC are all positively correlated. A fourth stock is being considered for addition to the portfolio, either stock D or stock E. Both D and E have expected returns of 12 percent.

  Calculate the cost of the newly issued stock

Roto Roofing Corporation just paid a dividend of $1.85. This dividend is expected to grow at a constant annual ratae of 3 percent each year. Roto Roofing's common stock is currently selling for $12.50.

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd