Find the market price of the stock

Assignment Help Finance Basics
Reference no: EM1354869

Executive Chalk is financed solely by common stock and has outstnading 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 announcment?
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: EM1354869

Questions Cloud

Signaling in maintaining social organization : What is the role of signaling in maintaining social organization? Give an example.
Illustrate what two policies could you use to reduce : Illustrate what two policies could you use to reduce the total amount of emissions.
Explain how do cognitive biases affect learning : Explain how do cognitive biases affect organizational learning and the quality of decision making and what can be accomplished to reduce the negative impact?
Question on notes receivable : On July 1, 2007, Gale Sondergaard Company sold special-order merchandise on credit and received in return an interest-bearing note receivable from the customer. Sondergaard will receive interest at the prevailing rate for a note of this type. Both..
Find the market price of the stock : Executive Chalk is financed solely through common stock and has outstnading 25 million shares with a market price of $10 a share. It now announces that it intends to issue $160 million of debt & to use proceeds to buy back common stock.
Find the moment of inertia of this system : If the bullet has a mass of 21.5 and a speed of 310 , how high would the block rise into the air after the bullet becomes embedded in it.
Explain and contrast independent and dependent demand : Explain and contrast independent and dependent demand, and then provide three to four advantages and disadvantages that are evident in both
Evalute the shape of the indifference curves : Evalute the shape of the indifference curves of the following utility functions and find MRS for each function.
Potential ethical dilemmas : Explain why it is important to be free of bias in your observations and the conclusions you draw about cause and effect, and identify any potential ethical dilemmas that could arise from your research.

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Systemic and unsystemic events

Classify the following events as mostly systematic or mostly unsystematic and tell us why. Is the distinction clear in each case?

  Relating mutually exclusive projects

Relating Mutually Exclusive Projects and If the company plans to replace the machine

  Estimate the level of output

Given the following cost function, estimate the level of output at which the cost function is minimized, and the level of the costs.

  Computation of weighted average cost of capital

Computation of weighted average cost of capital and construct a pro forma balance sheet that indicates the firm's optimal capital structure

  Present value of future payments

You've been offered the opportunity to invest $200,000 for 10 years in return for 10 annual payments of $30,000 each. What annual percent rate return will you get if you take the deal?

  Explain capital budgeting involves calculation value

Explain Capital budgeting involves calculation of net present value of Mills Mining is considering an expansion project

  Excess return each year should the actively managed

Find out excess return each year should the actively managed fund earn to overcome higher fees.

  Statements concerning defined-contribution plans

Find the correct statements concerning defined-contribution plans.

  Compute the firm''s equity multiplier at given a debt ratio

Compute the firm's equity multiplier at given a debt ratio

  Determine additional cash and value of shares

Raviv Corporation has $100 million in cash that it can use for a share repurchase. Assume instead Raviv invests the funds in an account paying 10% interest for one year.

  Explain difference in governance and control structure

Explain difference in governance and control structure of different countries and expect to happen to the Financial architecture of corporations

  Relating investment under many capital budgeting techniques

Relating investment under various capital Budgeting Techniques and whichever project you choose

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