The firm is considering increasing its debt by $900,000, using the proceeds to buy back 90,000 shares of stock. what does buy back mean?

Suppose you have just become the president of J&J and the first decision you face is whether Co go ahead with a plan to renovate the company's Al systems. The plan will cost the company $60 million, and it is expected to save $15 million per year after taxes over the next five years. The firm sources of funds and corresponding required rates of return are as follow: $5 million common stock at 16%, $800,000 preferred stock at 12%, $6 million debt at 7%. All amounts are listed at market values and the firm's tax rate is 30%. You are the financial manager and supposed to calculate the NPV. What's the NPV? Do you recommend taking the project? ง = O NPV $5.167 Millions; I'll recommend the owners to take the project. O NPV=-$1.720 Millions; I'll tell the owners not to take the project. NPV = $4.562 Millions; I'll tell the owners not to take the project. O NPV=-$8.098 Millions; I'll tell the owners not to take the project.

Tecumseh Inc. is analyzing the possible merger with Devonshire Inc. Savings from the merger are estimated to be a one-time after-tax benefit of $156 million. Devonshire Inc. has 5.2 million shares outstanding at a current market price of $82 per share. What is the maximum cash price per share that could be paid for Devonshire Inc.? (Omit "$" sign in your response.) Maximum cash price per share $

Use the following questions to answer Q5 to 07. Hamstrung Electronics Inc. (HEI) has 6 billion shares outstanding and a share price of $15. HEI is considering developing a new product in house at a cost of $500 million. Alternatively, HEI can acquire a firm that already has the technology for $450 million worth (at the current price) of HEI's stock. Suppose that absent the expense of the new technology, HEI will have EPS of 5 0.78. 5. Suppose HEI develops the product in house. What impact would the development cost have on HEI's EPS? Assume all costs are incurred this year and are treated as an R&D expense, HEI's tax rate is 25% and the number of shares outstanding is unchanged. A. EPS will increase by $0.06. B EPS will decrease by $0.06. C. EPS will increase by $0.16. D. EPS will decrease by $0.16. 6. Suppose HEI does not develop the product in house but instead acquires the technology. What effect would the acquisition have on HET's EPS this year? (Note that acquisition expenses…

Zang Industries has hired the investment banking firm of Eric, Schwartz, & Mann (ESM) to help it go public. Zang and ESM agree that Zang’s current value of equity is $60 million. Zang currently has 4 million shares outstanding and will issue 1 million new shares. ESM charges a 7% spread. What is the correctly valued offer price, rounded to the nearest penny? How much cash will Zang raise net of the spread (use the rounded offer price)?

You have started a company and are in luck—a venture capitalist has offered to invest. You own 100% of the company with 4.56 million shares. The VC offers $1.03 million for 820,000 new shares. b. What is the​ post-money valuation? c. What fraction of the firm will you own after the​ investment?

Google has 15 million shares outstanding with a current market price of $2 per share. Google announces an investment in a project where the initial investment in year 0 is $5 million and the cash inflow for the next five years will be $3 million, after which the investment will generate no cash flows. Google’s discount rate for this project is 8%. What is the dollar increase in Google’s share price due to the undertaking this investment?

River Cruises is all-equity-financed with 100,000 shares. It now proposes to issue $300,000 of debt at an interest rate of 12% and use the proceeds to repurchase 30,000 shares at $10 per share. Profits before interest are expected to be $130,000.   What is the ratio of price to expected earnings for River Cruises before it borrows the $300,000? What is the ratio after it borrow?

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

Marseille Manufacturing (MM) is considering raising money through a rights offering. MM currently has 10 million shares outstanding selling for €20 per share.  Current shareholders will receive one right per share.  Five rights are required to buy one share for €15.  Will the rights be exercised?  How much money will MM raise if all rights are exercised?  What is the intrinsic value of a right (expected selling price for a single right)?