All-equity firm-shares of the outstanding stock

Assignment Help Financial Management
Reference no: EM131087917

Thompson amp; Thomson is an all-equity firm that has 280,000 shares of stock outstanding. The company is in the process of borrowing $2.4 million at 5.5 percent interest to repurchase 75,000 shares of the outstanding stock. What is the value of this firm if you ignore taxes?

Reference no: EM131087917

Questions Cloud

Statements concerning financial risk : Which of the following statements concerning financial risk is false?
What is the value of the straight-debt portion of bonds : Herbert Engineering is issuing new 15-year bonds that have warrants attached. If not for the attached warrants, the bonds would carry a 9% annual interest rate. However, with the warrants attached the bonds will pay a 6% annual coupon. There are 30 w..
What are capital structure weights-cost of preferred equity : XYZ corp. currently has 50 million shares of common stock outstanding. Their current market price is $80 per share and have a beta of 1.15. XYZ has $1 billion of bonds outstanding, each with the market value of $1100. What is the cost of preferred eq..
What is the value of the straight-debt portion of the bonds : Thomson Engineering is issuing new 20-year bonds that have warrants attached. If not for the attached warrants, the bonds would carry an 11% annual interest rate. However, with the warrants attached the bonds will pay an 8% annual coupon. There are 3..
All-equity firm-shares of the outstanding stock : Thompson amp; Thomson is an all-equity firm that has 280,000 shares of stock outstanding. The company is in the process of borrowing $2.4 million at 5.5 percent interest to repurchase 75,000 shares of the outstanding stock. What is the value of this ..
According to the gordon growth model : According to the Gordon growth model, what is an investor's valuation of a stock whose current dividend is $1.00 per year if dividends are expected to grow at a constant rate of 10 percent over a long period of time and the investor's required return..
Create strategic plan : You have been asked to create a strategic plan for a new Renal Dialysis Center that will open in six months. Your plan needs to include and expand upon the six major components. Mission statement Vision statement Values Goals Objectives Action plan Y..
Fixed asset turnover and total asset turnover ratios : Thompson Corp has a NPM of 11.5%. They reported earnings after tax of $632,500. If they had net fixed assets of $1,500,000 and current assets of $750,000, what are their fixed asset turnover and total asset turnover ratios?
Driven per year for leasing and buying to cost the same : How many kilometers must a car be driven per year for leasing and buying to cost the same? Use 10% interest and year-end cost. Leasing: $0.20 per kilometer Buying: $5000 purchase cost, 3-year life, salvage $1200. $0.04 per kilometer for gas and oil, ..

Reviews

Write a Review

Financial Management Questions & Answers

  About the the risk-free rate of return

The stock of Big Joe's has a beta of 1.14 and an expected return of 11.2 percent. The risk-free rate of return is 3 percent. What is the expected return on the market? 11.89 percent 8.90 percent 8.20 percent 8.57 percent 10.19 percent

  Estimate of the stocks current market value

Nachman Industries just paid a dividend of D0 = $1.32. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What..

  High-yield junk bond with the features

Tinker Spy Corp. has a high-yield junk bond with the following features: Principal $500 Coupon 0% for years 1 through 5 and 11% for years 6 through 10 Maturity 10 years The current interest rate on comparable debt is 10 percent. If you expect that th..

  Able to reduce working capital

Your firm is contemplating the purchase of a new $595,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $63,000 at the end of that time. You will be able to reduce wo..

  Called breakup value-about book value or even market value

Shows how much would be left if a company is closed and sell all assets and pay all liabilities immediately."? and also there's another informal term for that, which is called "breakup value". Once you've squared away the different definitions, the q..

  What is total opportunity cost for the class

Josh has decided to take a course at the local community college that could help him get a promotion at work. The course begins at 5 p.m. and goes until 9 p.m. on Monday nights. Josh normally works until 5 p.m. each day, but because of the drive time..

  What inflation rate is expected after year

Due to a recession, expected inflation this year is only 3%. However, the inflation rate in year 2 and thereafter is expected to be constant at some level above 3%. Assume that the expectation theory holds and the real risk free rate (r*) is 2%. If t..

  Government bond matures-what is the yeild to the investor

A US government bond matures in 10 years. Its quoted price is now 96.4, which means the buyer will pay $96.40 for each $100 of the bond's face value. The bond pays 5% interest on its face value each year. If $10,000 (the face value) worth of these bo..

  Calculate the net present value-payback-profitability index

Using a 5% discount rate, calculate the Net Present Value, Payback, Profitability Index, and IRR for each of the investment projects below. Assuming a budget of $2,000,000 what are your recommendations for the above problem? Explain.

  The bonds make semiannual payments

Stone Sour Corp. issued 20-year bonds 8 years ago at a coupon rate of 8.70 percent. The bonds make semiannual payments. If these bonds currently sell for 108 percent of par value, what is the YTM?

  What is the current yield of the bond

A bond with a coupon rate of 4% making annual payments is being offered with a YTM of 5%. If the bond has 12 years until it matures, what is the current yield of the bond? (Express your answer as a percentage. example: 3.45)

  Analyze financial data and present the rationale to deny

Analyze financial data and present the rationale to deny a loan renewal request

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