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A firm has a current debt/equity ratio of 2:3. It is worth $10 billion, of which $4 billion is debt. The firm's overall cost of capital is 12%, and its debt currently pays an (expected) interest rate of 5%.
The firm estimates that its debt rating would deteriorate if it were to refinance to a 1:1 debt/equity ratio through a debt-for-equity exchange, so it would have to pay an expected interest rate of 5.5%.
The firm is solidly in a 35% corporate income tax bracket. The firm reported net income of $500 million.
On a corporate income tax basis only, ignoring all other capital structure-related effects, what would you estimate the value consequences for this firm to be? When would equity holders reap this benefit? What would be the stock's announcement price reaction?
a company is currently operating at 75 of its capacity producing 60000 units during the year 2009 at the following cost
Cedar sold machine, which cost 225,000$ & had accumulated depreciation of 90,000$, for $105,000. Make a statement of cash flows using the indirect method.
As an organizational leader investing your company's cash, would you choose stocks, bonds, or derivatives for investment purposes?
What would the required reserves ratio have to be to reach the new target M1 money supply amount? Assume the other oringinal ratio relationships hold.
Perform a Du Pont analysis on Green Valley - shares of Green Valley's stock outstanding and that some recently sold for $45 per share.
2FBM702 -development of a business plan for a new business within the Fashion Industry. A business plan is very important to the development of any business or entrepreneurial opportunity.
Your new beta should be calculated automatically. Compare the levered versus the unlevered beta. Please notice that if your firm holds no debt with a tax-deductibility feature, then levered and unlevered beta should be the same.
what are some of the issues Felicia and Fred can do to optimally manage? What are the risks of poor management of the element you selected - should the company fund a working capital increase with short-term debt or long-term debt?
What will be the price received by the DI for the loans if they have to be sold in two days and what amount will they receive and what will be the price received by the DI for the loans if they have to be sold in two days? In four days?
use the black-scholes option pricing formula to check whether a call option is priced correctly.pick any corporation of
Compute the present value of the note, rounded to the nearest dollar, using Marshalls typical interest rate of 6 percent. Show the journal entry to record the equipment purchase (round to the nearest dollar). Show the journal entry at the end of the ..
Compute the ratios below for Blue Bill Corporation based on the financial statements provided. Ending inventory was $1,237.6 for year 2010. After calculating the various ratios, analyze the overall financial health of Blue Bill Corporation.
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