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Edelman Enterprises is an all-equity ?rm with 500,000 shares outstanding. The company's EBIT is $4,000,000, and EBIT is expected to remain constant over time. The company pays out all of its earnings each year, so its earnings per share (EPS) equals its dividends per share (DPS). The company's tax rate is 40%. The company is considering issuing $4,000,000 worth of bonds (at par) and using the proceeds for a stock repurchase. If issued, the bonds would have an estimated YTM of 6.5%. The risk-free rate is 2.75%, and the market risk premium is 6%. The company's beta is currently 0.95, but investment bankers say the beta will rise to 1.04 if the recapitalization occurs. Assume that the shares are repurchased at a price equal to the stock market price prior to the recapitalization. What would be the company's stock price following therecapitalization?
a. $55.25
1). $56.30
c. $5 7.45
d. $58.1 1
e. $59.29
In a two- to three-page paper (not including the title and reference pages), explain the purpose of a cash flow statement and how it reflects the firm's financial status. Include important points that an analyst would use in assessing the finan..
Borrow $10,200 from the First National Bank at a fixed rate of 12% per annum, simple interest. The loan would be repaid in equal monthly installments over a 3 year period.
There are two assignments listed below. DO NOT DO BOTH! Choose only one assignment to complete. Pick the one you most feel competent and confident in doing.
Suppose you are purchasing your first house for $220,000, and are paying $30,000 as a down payment. You have arranged to finance the remaining $190,000 30-year mortgage with a 7% nominal interest rate and monthly payments.
On which financial statement could you find a reconciliation of the beginning and ending balances of comprehensive income (or total recognized income and expense) for a given period of time?
military radar and missile detection systems are designed to warn a country of enemy attacks. a reliability question
execon company had total assets of 200000 total liabilities of 110000 and shareholders equity of 90000 at the beginning
Financial Interpretation No. 46R, "Consolidation of Variable Interest Entities," references several of the FASB Concepts Statements in motivating the need to identify and consolidate variable interest entities.
1- albert pujols hit 47 home runs in 2009.if his home -run output grew at a rate of 12 percent per year what would it
Assuming interest at 14% a year compounded semiannually, how many deposits of $4,000 each will be required and what is the amount of the last deposit?
What is the constant dollar interest rate for a periodic interest rate of 9% and an inflation rate of 4%?
Corporate Governance and Shareholder Protection are important topics in any study of Finance. These issues are of particular interest to folks investing in emerging or developing markets. Use the following site or other Google searches to view rec..
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