Maximize current market value

Assignment Help Finance Basics
Reference no: EM1366904

I. You may have heard big business criticized for focusing on short-term performance at the expense of long-term results. Describe why a company that strives to maximize stock value should be less subject to an overemphasis on short-term results than one that simply maximizes profits.

II. We claim that the goal of the firm is to maximize current market value.
Could the following actions be consistent with that goal?
a. The firm adds a cost-of-living adjustment to the pensions of its retired employees.
b. The firm reduces its dividend payment, choosing to reinvest more of earnings in the business.
c. The firm buys a corporate jet for its executives.
d. The firm drills for oil in a remote jungle. The chance of finding oil is only 1 in 5.

III. Explain why each of the following may not be appropriate corporate goals:
a. Increase market share.
b. Minimize costs.
c. Underprice any competitors.
d. Expand profits.

Corporate Financing. Financial markets and intermediaries channel savings from investors to corporate investment. The savings make this journey by many different routes.

Give a specific example for each of the following routes.
a. Investor to financial intermediary, to financial markets, and to the corporation.
b. Investor to financial markets, to a financial intermediary, and to the corporation.
c. Investor to financial markets, to a financial intermediary, back to financial markets, and to the corporation.

Equity Accounts. The authorized share capital of the Alfred Cake Company is 100,000 shares.

The equity is currently shown in the company's books as follows:

Common stock ($1.00 par value) $ 60,000
Additional paid-in capital 10,000
Retained earnings 30,000
Common equity 100,000
Treasury stock (2,000 shares) 5,000
Net common equity 95,000

a. How many shares are issued?
b. How many are outstanding?
c. How many more shares can be issued without the approval of shareholders?

Preferred Stock. In what ways is preferred stock like long-term debt? In what ways is it like common stock?

Reference no: EM1366904

Questions Cloud

Explain how to troubleshoot a network : You have been hired to aid troubleshoot a network. Users in this customer site have being experiencing intermittent problems.
Find particularly impressive about southwest airlines : What grade would you give Southwest management for the job it has done in crafting the company's strategy and what is it that you like or dislike about the strategy
Basis for in consumption patterns : Examine the basis for the trends in consumption patterns, as discussed in any article and explain what has occurred to change the demand for, or the supply of, the products, and market prices of those products.
Write non-abstract subclass constructor accepting double : Write (non-abstract) subclass, ApartmentHouse, containing: an int instance variable numberOfApartments. a constructor accepting a double, passed to superclass constructor, and an int used to initialize numberOfApartments
Maximize current market value : You may have heard big business criticized for focusing on short-term performance at the expense of long-term results. Describe why a company that strives to maximize stock value should be less subject to an overemphasis on short-term results than on..
Global partnerships-reducing health disparities : Describe some of the merits of how global partnerships can help in solving or reducing health disparities and diseases among global communities.
Arc-approximation formula : Use arc-approximation formula to compute the price-elasticity of demand coefficient of the firm's product demand between the (quantity, price) points of (100, $20) and (300, $10).
Health issues for international effects : Look at a health issues which consists of international effects and has gotten some recent media coverage. Was it preventable?
Which vulnerability be evaluated for extra controls first : If organization has three information assets to evaluate for risk management as shown in accompanying data, which vulnerability must be evaluated for additional controls first? Which one must be evaluated last?

Reviews

Write a Review

Finance Basics Questions & Answers

  Exchange rates and forward contracts

Assume you issued a 90-day forward contract to exchange 100,000 New Zealand dollars into U.S. dollars. How many U.S. dollars are involved?

  Calculate the profit or loss and break-even point

Healthy Foods, Corporation, sells fifty pound bags of grapes to the military for $10 a bag. The fixed costs of this operation are $80,000, while the variable costs of the grapes are $.10 per pound.

  Classification of development costs

Masters Golf Products, Corporation, spent 3 years and $1,000,000 to develop its new line of club heads to replace a line that is becoming obsolete. To start manufacturing them, the company will have to invest $1,800,000 in new equipment.

  Determine the amounts of any cash inflows or outflows

The following account balances relate to the stockholders' equity accounts of Gore Corporation at the year end.

  Determination of abnormal return

AT&T announced its intent to acquire TCI. The assets of obtained in the acquisition helped create AT&T Broadband. Three years later, on Monday July 9, 2001,

  Mutual of chicago insurance company

Robert Balik and Carol Kiefer are senior vice presidents of the Mutual of Chicago Insurance Company. They are co-directors of the company's pension fund management division-Write down  a formula that can be used to value any stock, regardless of it..

  Find required additional external capital

The Landis Company had 2004 sales of $100 million. The balance sheet items that vary directly with sales and the profit margin are as follows:

  Common stock valuation

Mary Lee, a Harvard graduate with Invest Inc. of Oklahoma City is trying to sell you a stock with a current market price of $25.00. The stocks last dividend was $2.00,

  Effective supply side management

Electronic Data Exchange and Electronic Funds Exchange have been active in larger firms for more than 10-years. Determine examples from your research and knowledge where the above tools have greatly improved business efficiency.

  How would investors and management view eva and fcf?

How would investors and management view EVA and FCF? Try one that you are familiar with-you shop at their store, eat at their restaurants, or wear their clothes. On their Web site, try to find their annual financial report.

  Compute interest amount

Data Back-Up Systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 15 percent, payable at maturity. Suppose 365 day year.

  Computing value of covered interest arbitrage

Assume the current spot rate is C$1.1875 and the one-year forward rate is C$1.1724. The nominal risk-free rate in Canada is 4 percent while it is 3 percent in the U.S.

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