User Account

All Pages

Difference in repurchasing stock and paying special dividend

Assignment Help Finance Basics
Reference no: EM131690194

Question: BMD Inc is a firm with no debt on its books currently and a market value of equity of $ 2 billion. Based upon its EBITDA of $ 200 million, it can afford to have a debt ratio of 50%, at which level the firm value should be $ 300 million higher.

a. Assuming that the firm plans to increase its leverage instantaneously, what are some of the approaches it could use to get to 50%?

b. Is there a difference between repurchasing stock and paying a special dividend? Why or why not?

c. If BMD has a cash balance of $ 250 million at this time, will it change any of your analysis?

Reference no: EM131690194

Questions Cloud

List websites that would be appropriate for teaching : Various studies have shown that most educators do not know how to properly evaluate websites though they are being used in classrooms daily.
Effective management of information systems : Effective management of information systems and supply chain management can provide an enduring competitive advantage to a retailer.
Successful application of big data in financial industry : Conduct a search on a successful application of big data in the financial industry and give a brief summary of the selected article.
Explore a personal connection or tie-in to the passage : In 200-250 words, explore a personal connection or tie-in to this passage. What relevance does this passage have for you, your life, our world?
Difference in repurchasing stock and paying special dividend : BMD Inc is a firm with no debt on its books currently and a market value of equity of $ 2 billion. Based upon its EBITDA of $ 200 million.
While most people think of puritan customs : While most people think of Puritan customs as being too strict, outdated, draconian, and perhaps outrageous, bits and pieces of quite a few laws
Bid on contract that has been submitted to outside vendors : Jim’s company has an in-house tool-and-die department that would like to bid on a contract that has been submitted to outside vendors.
Write an essay about finding childcare : Write an essay about Finding Childcare. Did you use first person pronouns? Did you paraphrase or restate the thesis in a new way?
How does the value of the firm will increase with leverage : XCV Inc., which manufactures automobile parts for assembly, is considering the costs and the benefits of leverage. The CFO notes that the return on equity.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd