Green Manufacturing, INC., plans to announce that it will issues $1.93 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a coupon rate of 5 percent. Green is currently an all equity firm worth $5.08 million with 330,000 shares of common stock outstanding. After the sale of the bonds. Green will maintain the new capital structure indefinitely. Green currently generates annual pretax earnings of $1.43 million. This level of earnings is expected to remain constant in perpetuity. Green is subject to a corporate tax rate of 35 percent.
Expected return is 18.30 %
Price per share is 15.40
New Share price
Shares repurchased 110665.14
New Shares outstanding
What is the required return on Green’s equity after the restructuring?
Fans are frequently needed to keep electronic circuits cool. They vary in size, power require- ment, input voltage, and air-flow rate. In a particular application, three ...May 24 2020
The subprime financial crisis caused a recession because of the ________ in adverse selection and moral hazard problems and the ________ in housing prices.A) increase; in...Mar 14 2020
According to the table above, this firm would most likely set price at the quantity where______________. a. MR = ATC b. MR = P c. MR = MC d. None of the aboveApr 18 2020
EXERCISE 10A–6 Predetermined Overhead Rate; Overhead Variances [LO3, LO4]Weller Company’s variable manufacturing overhead should be $1.05 per standard machine-hour and it...Jun 28 2020
Overton Enterprises is converting to an activity-based costing system. It wishes to depict the various activities in its manufacturing process along with the activities...Feb 08 2020
What is the slope of the indifference curve for the utility function U(x,y) = z , yi/3when (x,y) = (3,2)?? a. 2 b. -2 c. 9/2 d. -9/2Apr 05 2020
During the first year of operation, 2014, Ferrell’s Appliance recognized $261,000 of service revenue on account. At the end of 2014, the accounts receivable balance was $...Jun 25 2020
A 12-ft-long weightiness member supports two loads, as shown. The member is held horizontal by two flexible cables attached to its ends. Determine the force in each cable...Jun 26 2020
Consider a company like General Motors that must make estimates on pension liabilities, health care liabilities, guarantees on the contracts with Delphi, warranty liabili...Jun 16 2020
Brady Products manufactures a silicone paste wax that goes through three processing departments—Cracking, Blending, and Packing. All raw materials are introduced at the s...Jun 30 2020
Welcome to MyCourseHelp Services, World's leading Academic solutions provider with Millions of Happy Students.