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