What is the debt ratio after the change in structure

Assignment Help Finance Basics
Reference no: EM13278888

Executive Chalk 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: EM13278888

Questions Cloud

Explain how much energy in kj is needed to heat ice : How much energy in kJ is needed to heat 5.00g of ice from -10.0oC to 30.0oC? The heat of fusion of water is 6.01 kJ/mol and the molar heat capacity is 36.6 J/(oK.mol) for ice and 75.3 J/(oK.mol) for liquid water.
What stock price would you consider appropriate : The Sleeping Flower Co. has earnings of $1.75 per share. The benchmark PE for the company is 18. What stock price would you consider appropriate? What if the benchmark PE were 21?
What is the amount of the last dividend this company paid : Lamey Headstones increases its annual dividend by 1.5 percent annually. The stock sells for $28.40 a share at a required return of 14 percent. What is the amount of the last dividend this company paid?
Determine the new temperature of the gas : 4.48 L of an ideal gas is initially at a temperature of 303oC. While the volume is kept constant, Determine the new temperature of the gas
What is the debt ratio after the change in structure : 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?
State what is the concentration of cl in a solution : What is the concentration of [Cl?] in a solution of 10 mL of 12 M HCl when 6 mL of water is added
Determine the pressure in the second section : A liquid with a density of 1680 kg/m3 flows through a horizontal pipe with varying cross section. Determine the pressure in the second section
What is the expected capital gains yield : The next dividend payment by Blue Cheese, Inc., will be $1.89 per share. The dividends are anticipated to maintain a growth rate of 5 percent forever. The stock currently sells for $38 per share. 1. What is the dividend yield? 2. what is the expec..
How many may he purchase using a margin brokerage : The answers are 60 @ 17.65% and 100 @ 28.04%. I know how to get the number of shares, but can't I get the yield rates. Thanks.

Reviews

Write a Review

Finance Basics Questions & Answers

  Product to illustrate the connection the company

Explain the company and the product to illustrate the connection the company has with the environment and describe the impact this company's actions have on our environment

  How internal selection decisions differ from external

Explain how internal selection decisions differ from external selection decisions. Write down the differences among peer ratings, peer nominations, and peer rankings. Should they be used? and how this can be employed in an organization.

  Explain construction of choice table for interest rate

Explain Construction of choice table for interest rate and Which alternative should be selected

  What is the value of the cash coverage ratio

A firm has sales of $4,720, costs of $2,520, interest paid of $167, and depreciation of $469. The tax rate is 30 percent. What is the value of the cash coverage ratio?

  What is the economic rationale for a fee schedule

What is the economic rationale for a fee schedule that declines (in percentage terms) with increases in assets under management?

  Computation of irr and npv of the project

Computation of IRR and NPV of the project and decision making and which project should be adopted and Why

  Compute the average collection period

Sanders' Prime Time Company has annual credit sales of $2,592,000 and accounts receivable of $604,800. Compute the average collection period. (Use 360 days in a year.)

  Finance problems on cash flow and discount rate

If the discount rate is 10 percent and the projects are mutually exclusive, which of the following is true, If the discount rate is 7%, which of the following is true:

  Objective type question bond yield and valuation

Objective type Question Bond Yield and Valuation and Identify the choice that best completes the statement or answers the question

  Computation of income statement and break-even analysis

Computation of income statement and break-even analysis and What is the dollar size of the issue

  Excess return each year should the actively managed

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

  Question on current value of stock

Stephens Development Company paid a dividend of$1.12 over the last 12 months. the dividend is expected to grow at a rate of 20% over the next 3 years(supernormal growth).

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