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There is a debate about stock repurchases whether they are liked by investors or not. Some investors like it because of tax treatments etc. and some other don't because of changes in ownership etc. Many firms issue debt to finance their stock repurchases. Issuing debt is another controversial topic. Too much debt might harm equity investors but at the same time, it saves the issuing firm's tax dollars. Also, debt is almost always cheaper than equity. Thus by issuing debt and using that money to buy back shares might lower a firm's cost of capital. Overall, the net effect of these capital restructuring decisions is unknown. Find a firm that issued debt and used those proceeds to repurchase its stock. Summarize the stock market reaction before the repurchase was announced and after the debt was issued and stocks were repurchased. Your summary should not exceed two pages.
Find the present value of the following ordinary annuities: a. $400 per year for 10 years at 10% b. $200 per year for 5 years at 5% c. $400 per year for 5 years at 0% d. Now r
Laurel Enterprises expects earnings next year of $3.55 per share and has a 40% retention rate, which is plans to keep constant. Its equity cost of capital is 9%, which is also
Suppose a stock had an initial price of $101 per share, paid a dividend of $3.20 per share during the year, and had an ending share price of $80.00. Compute the percentage tot
Suppose call and put prices are given by: Strike 75 80 Call premium 7 8 Put premium 4 10. What no-arbitrage condition is violated by the call premiums? What spread position wo
Orange Spark, Inc. just purchased a new storage facility. The company will begin making loan payments of $15513 at the end of year 5. Orange Spark will make a payment at the e
During the Vietnam War years the U.S. official reserves transaction balance was negative and U.S. reserve assets declined. With the fixed exchange rate system during those yea
London purchased a piece of real estate last year for $82,300. The real estate is now worth $102,000. If London needs to have a total return of 0.22 during the year, then what
Assume you sell short 100 shares of common stock at $45 per share, with initial margin at 50%. What would be your rate of return if you repurchase the stock at $40/share? The
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