Should management go ahead with the repurchase

Assignment Help Finance Basics

Reference no: EM131420840

BCD Manufacturing is considering repurchasing 40 percent of its common stock. Management estimates the tax savings from such a move to be $48 million, based on the addition of $1 billion of debt at a rate of 12 percent with a 40 percent marginal tax rate. However, the company's suppliers are unhappy with the decision and are threatening to revoke the company's net-30 day credit terms, which will cost the firm an additional 2 percent on its $1.5 billion inventory. Should management go ahead with the repurchase? Why or why not?

Reference no: EM131420840

Questions Cloud

Determine moisture content of product leaving dryer : A product enters a tunnel dryer with 56% moisture content (wet basis) at a rate of 10 kg/h. The tunnel is supplied with 1500 kg dry air/h at 50°C and 10% RH, and the air leaves at 25°C in equilibrium with the product at 50% RH. Determine the moist..

What successes are enabled by an adequate understanding : Why is the skill, concept, procedure, or tool necessary for accurate record-keeping, operational efficiency, excellent patient services, employee management, regulatory compliance, reducing costs, forecasting, etc.?What successes are enabled by an..

What methods could be applied to secure the communications : When might having a VPN solution actually introduce additional threats and attacks to a private internal network? What methods could be applied to secure the communications?

Straight wire carrying a current : If the magnitude of the tornado's field was B = 1.75 ? 10-8 T pointing north when the tornado was 8.80 km east of the observatory, what current was carried up or down the funnel of the tornado? Model the vortex as a long, straight wire carrying a ..

Should management go ahead with the repurchase : Should management go ahead with the repurchase? Why or why not?

Explain benefit that objectoriented programming could afford : Explain the key benefits that object-oriented programming could afford the health care industry. Provide at least one example that demonstrates the primary manner in which the health care industry could implement control structures.

Find the magnitude and direction of the resultant : Critically reflect on the advantages and disadvantages of the techniques used to solve these problems. What are the main advantages and disadvantages to these analytical methods and what alternatives might you suggest?

Describe the content of the video : Describe the content of the video, especially describing some key aspects of the video that you thought were especially interesting and Evaluate the importance of the material in understanding how these ancient cultures developed

Relationship between range of motion and joint stability : Explain the relationship between range of motion and joint stability, including examples of joints with different number of axes.

User Account

All Pages