Hi expart Provide answer this general accounting question Natsam Corporation has $300 million of excess cash. Thefirm has no debt and 600 million shares outstanding witha current market price of $19 per share. Suppose theboard decided to do a one-time share repurchase, butyou, as an investor, would have preferred to receive adividend payment. How can you leave yourself in thesame position as if the board had elected to make thedividend payment instead?

Step 1: Define BuybackBuyback of shares refers to repurchasing the share of own company from an…

Answered: Natsam Corporation has $300 million of…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter15: Capital Structure Decisions

Section: Chapter Questions

Problem 11P: The Rivoli Company has no debt outstanding, and its financial position is given by the following...

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The Rivoli Company has no debt outstanding, and its financial position is given by the following data: What is Rivoli’s intrinsic value of operations (i.e., its unlevered value)? What is its intrinsic stock price? Its earnings per share? Rivoli is considering selling bonds and simultaneously repurchasing some of its stock. If it moves to a capital structure with 30% debt based on market values, its cost of equity, rs, will increase to 12% to reflect the increased risk. Bonds can be sold at a cost, rd, of 7%. Based on the new capital structure, what is the new weighted average cost of capital? What is the levered value of the firm? What is the amount of debt? Based on the new capital structure, what is the new stock price? What is the remaining number of shares? What is the new earnings per share?
LL corporation has $500M of excess cash. The firm has no debt and 1K shares outstanding with a current market price of $20 per share. LL’s board has decided to pay out this cash as a one time dividend. If the board instead decided to use the cash to do a one time share repurchase, in a perfect capital market, what is the price of the shares once the repurchase is complete?
The ABC company is unlevered (that means, it currently has no debt) and is valued at $150,551. There are currently 3,562 shares outstanding. ABC is currently deciding whether to include debt in its capital structure. If ABC repurchases 347 shares, what will be the new value of the firm? Assume no taxes.
LL corporation has $500M of excess cash. The firm has no debt and 1K shares outstanding with a current market price of $20 per share. LL’s board has decided to pay out this cash as a one time dividend. What is the ex-dividend price of a share in a perfect capital market?
C and D is wrong. I need help please.
Assume that you are a shareholder in On-the-Move Corporation. The company has just changed its debt-equity ratio from 0.29 to 0.38. If you prefer the old capital structure, you should: Multiple Choice O sell some shares and loan out the sale proceeds. do nothing. borrow funds and purchase more shares. sell some shares and hold the sale proceeds in cash. sell all of their shares and loan out the entire sale proceeds.
Bluesky.com, which currently is a privately held corporation, is making plans for future growth. The company’s financial manager has recommended that Bluesky“go public” by issuing common stock to raise the funds needed to support thegrowth. The current owners, who are the founders of the company, are concernedthat control of the firm will be diluted by this strategy. If Bluesky undertakes anIPO, it is estimated that each share of stock will sell for $5, the investment bankingfee will be 15 percent of the total value of the issue, and the costs to the companyfor items such as lawyer fees, printing stock certificates, SEC registration, and so onwill be approximately 1 percent of the total value of the issue.a. If the market value of the stock issue is $42 million, how much will Blueskybe able to use for growth?b. How many shares of stock will Bluesky have to issue if it needs to net$42 million for growth?c. The founders now hold all of the company’s stock—10 million shares. If thecompany…
Taggart Technologies is considering issuing new common stock and using the proceeds to reduce its outstanding debt. The stock issue would have no effect on total assets, the interest rate Taggart pays, EBIT, or the tax rate. Which of the following is likely to occur if the company goes ahead with the stock issue? a. The times-interest-earned ratio will decrease. b. Net income will decrease. c. Taxable income will decline. d. The ROA will decline. e. The tax bill will increase.
Ewing Corporation is evaluating an extra dividend versus a share repurchase. In either case, $10,000 would be spent. Current earnings are $3 per share, and the stock currently sells for $50 per share. There are 5,000 shares outstanding. Ignore taxes and other market imperfections (e.g. transaction cost) in answering the questions. a) Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth. b) What will be the effect on Ewing’s EPS and PE ratio under the two different scenarios?
Plato Corporation’s board announces to pay $2 million excess cash to shareholders. At the announcement, the firm has no debt and 1 million shares outstanding with the market value of equity of $12 million. Assume that the markets are perfect. (i) What is the cum-dividend price? (ii) If the firm distributes the excess cash as a cash dividend, what is the exdividend price? Is the drop in share price the same as the cash dividend per share? Why? (iii) If the firm distributes the excess cash as a share repurchase, what will its share price once the shares are repurchased? (iv) If you hold 1,000 shares and the firm distributes the excess cash as a share repurchase in part (iii). How do you use homemade dividend to receive a cash dividend as in part (ii)?
Xtel Inc. with a total market value of $630 million has $30 million in excess cash and no debt. Xtel has 1 million shares outstanding. Xtelʹs board is meeng to decide whether to pay out its $30 million in excess cash as a special dividend or to use it to repurchase shares of the firm’s stock. You own 1,000 shares of Xtel stock. Assume that Xtel uses the entire $30 million in excess cash to pay a special dividend. Calculate Xtelʹs ex-dividend price.
please help i cant fogure what im doing wrong for the last question

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