Reference no: EM131984325
Desert Rose, Inc., a prominent consumer products firm, is debating whether to convert its all-equity capital structure to one that is 25 percent debt. Currently, there are 12,000 shares outstanding, and the price per share is $56. EBIT is expected to remain at $36,000 per year forever. The interest rate on new debt is 9 percent, and there are no taxes.
a. Allison, a shareholder of the firm, owns 100 shares of stock. What is her cash flow under the current capital structure, assuming the firm has a dividend payout rate of 100 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Cash flow $
b. What will Allison’s cash flow be under the proposed capital structure of the firm? Assume she keeps all 100 of her shares. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Cash flow $
c. Assume that Allison unlevers her shares and re-creates the original capital structure. What is her cash flow now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Total Cash flow $
|
What will be your lease payments for lease
: The interest rate implicit in the lease is 5.75% APR, compounded monthly. What will be your lease payments for a 36-month lease?
|
|
Largest energy flows on earth
: ABSTRACT: Evaporation, which fuels rain and wind, is one of the largest energy flows on Earth
|
|
What is the nav of a share of seton capital fund
: Seton Capital Fund has $20 million assets, $1.5 million liabilities, and the fund has 700,000 shares outstanding.
|
|
Prepare a plan for how to resolve ethical and legal issues
: Prepare a plan for how to resolve ethical and legal issues. Develop an implementation plan for managing the potential legal and ethical concerns for the merger.
|
|
Cash flow be under the proposed capital structure of firm
: What will Allison’s cash flow be under the proposed capital structure of the firm? Assume she keeps all 100 of her shares.
|
|
What are examples that ifemelu uses hair to show
: In the book Americanah what are examples that Ifemelu uses hair to show, intersectional feminism, racism, sexism, and classism?
|
|
How can you use process explanations
: How can you use process explanations as a part of larger documents?
|
|
How does the sec monitor such activity
: Are Roger and Gordon being smart, being unethical but not breaking the law, or breaking the law? How does the SEC monitor such activity?
|
|
Prepare entire duration amortization schedule as follows
: Prepare (using spread sheet package) an entire duration amortization schedule as follows:
|