Consider this example:Shares of Ex Why Zee, Inc. (ticker symbol: XYZ) are currentlytrading at $6 per share. XYZ plans to issue $6M in short termdebt and use the money they borrow to repurchase $6M worthof their own stock. What effect will the debt issuance andshare repurchase have on the balance sheet?There isn't enough information to answer this questionAssets will increase by $6MLiabilities will decrease by $6MNumber of Shares Outstanding will increase by 1 millionEquity will decrease by $6M

Shareholder equity means the amount that belong to the owner of the company i.e. share holder.Profit…

Answered: Consider this example: Shares of Ex Why…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Let's go back to the Double-R Nutting Company. Suppose that Double-R's bonds have a face value of $64. Its current market-value balance sheet is: Book-Value Balance Sheet Assets Net working capital $ 90 Liabilities and Equity Bonds outstanding Fixed assets 80 Common stock $ 95 75 Total assets $ 170 Total liabilities and shareholders' equity $ 170 Who would gain or lose from the following maneuvers? a. Double-R pays a $80 cash dividend. b. Double-R halts operations, sells its fixed assets for $20, and converts net working capital into $90 cash. It invests its $110 in Treasury bills. c. Double-R encounters an investment opportunity requiring a $80 initial investment with NPV = $0. It borrows $80 to finance the project by issuing more bonds with the same security, seniority, and so on, as the existing bonds. d. Double-R finances the investment opportunity in part (c) by issuing more common stock. a. b. C. d. Stockholders Bondholders
(Related to Checkpoint 4.1) (Liquidity analysis) Airspot Motors, Inc. has $2,517,200 in current assets and $868,000 in current liabilities. The company's managers want to increase the firm's inventory, which will be financed using short-term debt. How much can the firm increase its inventory without its current ratio falling below 2.1 (assuming all other current assets and current liabilities remain constant)? Airspot Motors, Inc. could add up to $ in inventories. (Round to the nearest dollar.)
Let's go back to the Double-R Nutting Company. Suppose that Double-R's bonds have a face value of $61. Its current market-value balance sheet is: Assets Book-Value Balance Sheet Liabilities and Equity Net working capital Fixed assets $ 75 Bonds outstanding $ 80 65 Common stock 60 Total assets $ 140 Total liabilities and shareholders' equity $ 140 Who would gain or lose from the following maneuvers? a. Double-R pays a $65 cash dividend. b. Double-R halts operations, sells its fixed assets for $17, and converts net working capital into $75 cash. It invests its $92 in Treasury bills. c. Double-R encounters an investment opportunity requiring a $65 initial investment with NPV = $0. It borrows $65 to finance the project by issuing more bonds with the same security, seniority, and so on, as the existing bonds. d. Double-R finances the investment opportunity in part (c) by issuing more common stock. Stockholders a. b. C. d. Bondholders
7.
Solve it using formulas, no tables correct answers are: i) i^2= 0.063977 > 0.0536 iii) Po= £91,630.9 iv) i'= 0.028985 = 2.9% pa
A firm has 5 million shares outstanding with a market price of $35 per share. The firm has $10 million in extra cash (short-term investments) that it plans to use in a stock repurchase; the firm has no other financial investments or any debt. What is the firm's value of operations after the repurchase? Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places. $ million How many shares will remain after the repurchase? Round your answer to the nearest whole number. shares
ABC Corporation has debt with a value of $100 million and common stock with a market value of $200 million .Investors expect 6% return on the debt and a a 15% return on the stock Assume perfect capital markets. Suppose ABC issues $100 million of new stock to buy back the debt. What is the expected return of the stock after this transaction? Suppose instead ABC corporation issues $50 million of new debt to repurchase stock. what is the expected return of the stock after this transaction,If the risk of the debt does not change? Would the expected return of the stock be higher or lower than in part (i)? If the risk of the debt increases,
Please don't use Ai solution
A) Suppose that Facebook has earnings per share (expected next year) of $6.20 and that Facebook’s discount rate for equity is 12%. If Facebook is not expected to grow at all, what would Facebook’s share price be? Do not include the $ sign and answer to the nearest $0.01. B) Instead, Facebook is trading at $160 per share. What is the present value of Facebook’s growth opportunities per share? Do not include the $ sign and answer to the nearest $0.01.

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