Lexington Company had a current share price of $42, and the firm had 600,000 shares of...
Lexington Company had a current share price of $42, and the firm had 600,000 shares of stock outstanding. The company is considering an investment project that requires an immediate $13,000,000 investment but will produce a single cash flow of $17,000,000 after 2 years then close. If Lexington Company invests in the project, what would the new share price be? Lexington's cost of capital is 12%. (Hint: consider how the project NPV creates wealth for shareholders)
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Lexington Company had a current share price of $42, and the firm
had 600,000 shares of...
McDonald's had a current share price of $47, and the firm had 600,000 shares of stock...
McDonald's had a current share price of $47, and the firm had 600,000 shares of stock outstanding. The company is considering an investment project that requires an immediate $15,000,000 investment but will produce a single cash flow of $18,600,000 after 2 years then close. If McDonald's invests in the project, what would the new share price be? McDonald's cost of capital is 12%. (Hint: consider how the project NPV creates or destroys wealth of shareholders) $47.00 $48.32 $46.71 $50.18 $45.92
NCC Company had a current share price of $31.25, and the firm had 1,760,000 shares of...
NCC Company had a current share price of $31.25, and the firm had 1,760,000 shares of stock outstanding. The company is considering an investment project that requires an immediate $7,100,000 investment but will produce a single cash flow of $11,600,000 after 2 years then close. If NCC Company invests in the project, what would the new share price be? NCC Company's cost of capital is 10%. (Hint: calculate the project NPV then consider how the project NPV affects stock price)...
Green Footwear had a current share price of $24.72, and the firm had 1,800,000 shares of...
Green Footwear had a current share price of $24.72, and the firm had 1,800,000 shares of stock outstanding. The CEO of the company is considering an investment project that he is confident will result in an NPV of $1,500,000. However, investors are pessimistic about the project's prospect and believe that the project would result in an NPV of -$900,000 instead. If the CEO decides to go ahead with the project and the negative NPV as expected by investors is realized,...
Hawar International is a shipping firm with a current share price of $ 5.47 and 10.9 million shares outstanding. Suppose...
Hawar International is a shipping firm with a current share price of $ 5.47 and 10.9 million shares outstanding. Suppose that Hawar announces plans to lower its corporate taxes by borrowing $ 20.3 million and repurchasing shares, that Hawar pays a corporate tax rate of 30 %, and that shareholders expect the change in debt to be permanent. a. If the only imperfection is corporate taxes, what will the share price be after this announcement? b. Suppose the only imperfections...
The Upland company has 30 million shares of common stock outstanding, and the current market price...
The Upland company has 30 million shares of common stock outstanding, and the current market price per share of the common stock is $20.00. Long-term debt outstanding is $400 million. The market yield of the debt is 6% and the common stock has an equity beta of 1.50; the risk-free rate of return is 3% and the expected return on the market portfolio is 12%. Also, Upland pays tax at the rate of 25%. Upland is considering a project in...
Pettygrove Company had 600,000 shares of $10 par value common stock outstanding. The amount of additional...
Pettygrove Company had 600,000 shares of $10 par value common stock outstanding. The amount of additional paid-in capital is $3,000,000, and Retained Earnings is $900,000. The company issues a 2-for-1 stock split. The market price of the stock is $26. What is the balance in the Common Stock account after this issuance? Multiple Choice 0 $9,000,000 0 $6,000,000 $13,800,000 0 0 $12,000,000
Firm X has a market value of S8,400 with 120 shares outstanding and a price per share of $70
11) Firm X has a market value of S8,400 with 120 shares outstanding and a price per share of $70. Firm Y has a market value of S2,000 with 100 shares outstanding and a price per share of S20. Firm X is acquiring Firm Y by exchanging 30 of its shares for all 100 of Firm Y's shares. Assume the merger creates S400 of synergy. What will be the value of Firm X's shareholders' stake in the merged firm? A) $9,050 B)...
Hawar International is a shipping firm with a current share price of $4.96 and 10.8 million shares outstanding. Suppose...
Hawar International is a shipping firm with a current share price of $4.96 and 10.8 million shares outstanding. Suppose that Hawar announces plans to lower its corporate taxes by borrowing $20.6 million and repurchasing shares, that Hawar pays a corporate tax rate of 30%, and that shareholders expect the change in debt to be permanent. a. If the only imperfection is corporate taxes, what will the share price be after this announcement? b. Suppose the only imperfections are corporate taxes...
AMS Company has unexpectedly generated a one-time extra $6 million in cash flow this year. After...
AMS Company has unexpectedly generated a one-time extra $6
million in cash flow this year. After announcing the extra cash
flow, AMS stock price was $45 per share (it has 1 million shares
outstanding). The managers are considering spending the $6 million
on a project that would generate a single cash flow of $6.5
million in one year, which they would then use to repurchase
shares. Assume the cost of capital for the project is 15%.
a. If they decide...
Ritz Company had the following shares outstanding and Retained Earnings at December 31, 2017: Common shares...
Ritz Company had the following shares outstanding and Retained Earnings at December 31, 2017: Common shares (500,000 outstanding shares) Preferred shares (8 percent: 21,000 outstanding shares) Retained earnings $500,000 210,000 900,000 On December 31, 2017, the board of directors is considering the distribution of a cash dividend to the common and preferred shareholders. No dividends were declared during 2015 or 2016. Three independent cases are assumed: Case A: Case B: The preferred shares are non-cumulative; the total amount of 2017...
The Upland company has 30 million shares of common stock outstanding, and the current market price per share of the common stock is $20.00. Long-term debt outstanding is $400 million. The market yield of the debt is 6% and the common stock has an equity beta of 1.50; the risk-free rate of return is 3% and the expected return on the market portfolio is 12%. Also, Upland pays tax at the rate of 25%. Upland is considering a project in...
Pettygrove Company had 600,000 shares of $10 par value common stock outstanding. The amount of additional paid-in capital is $3,000,000, and Retained Earnings is $900,000. The company issues a 2-for-1 stock split. The market price of the stock is $26. What is the balance in the Common Stock account after this issuance? Multiple Choice 0 $9,000,000 0 $6,000,000 $13,800,000 0 0 $12,000,000
Hawar International is a shipping firm with a current share price of $4.96 and 10.8 million shares outstanding. Suppose that Hawar announces plans to lower its corporate taxes by borrowing $20.6 million and repurchasing shares, that Hawar pays a corporate tax rate of 30%, and that shareholders expect the change in debt to be permanent. a. If the only imperfection is corporate taxes, what will the share price be after this announcement? b. Suppose the only imperfections are corporate taxes...
AMS Company has unexpectedly generated a one-time extra $6
million in cash flow this year. After announcing the extra cash
flow, AMS stock price was $45 per share (it has 1 million shares
outstanding). The managers are considering spending the $6 million
on a project that would generate a single cash flow of $6.5
million in one year, which they would then use to repurchase
shares. Assume the cost of capital for the project is 15%.
a. If they decide...
Ritz Company had the following shares outstanding and Retained Earnings at December 31, 2017: Common shares (500,000 outstanding shares) Preferred shares (8 percent: 21,000 outstanding shares) Retained earnings $500,000 210,000 900,000 On December 31, 2017, the board of directors is considering the distribution of a cash dividend to the common and preferred shareholders. No dividends were declared during 2015 or 2016. Three independent cases are assumed: Case A: Case B: The preferred shares are non-cumulative; the total amount of 2017...
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