What are the factors that determine whether the company should use cash acquisition or stock acquisition?
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- What are the factors that determine whether the company should use cash acquisition or stock acquisition?
- Discuss five different defensive tactics that the target company can use to thwart this takeover attempt.
3) What are the possible
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- Malabar Company limited is involved in construction and development of large projects. It's a public limited company with an authorized capital of 500,000,000 share par value of Rs. 10. Company has indicated an exponential growth in past years and its stockholders' wealth has been increased. Company pays dividend once or twice a year as per management decision. Due to the positive indicators of performance company enjoys a stable and positively growing share price. In current year the company's total Revenue is Rs. 5,500,000 and total expenses are Rs. 2,800,000. 350,000 shares are outstanding with par value of Rs.10. 1st June: Company declares 30% cash dividend. 1st August: Company declares 25% stock dividend and market price per share is Rs. 67. 15th December: Cash dividend paid. 20th December: Issued bonus shares. Required: Pass necessary entriesA transportation company needs to determine the cost of capital of its shares common. The company's stock is currently selling for $ 57.50. The company expects pay a dividend of $ 3.40 at the end of the year (2020). The following table shows the dividends of the last 5 years. Year Dividend2019 $ 3.102018 2.922017 2.602016 2.302015 2.12After administrative costs, the company expects to earn $ 52 per share from a new issue.a) Determine the growth rate of dividends from 2015 to 2019. (g =?)HBM, Inc has the following capital structure: Assets $ 350,000 Debt $ 87,500 Preferred stock 17,500 Common stock 245,000 The common stock is currently selling for $17 a share, pays a cash dividend of $0.80 per share, and is growing annually at 8 percent. The preferred stock pays a $9 cash dividend and currently sells for $100 a share. The debt pays interest of 7.0 percent annually, and the firm is in the 30 percent marginal tax bracket. What is the after-tax cost of debt? Round your answer to two decimal places. % What is the cost of preferred stock? Round your answer to two decimal places. % What is the cost of common stock? Assume that the current $0.80 dividend grows by 8 percent during the year. Round your answer to two decimal places. % What is the firm’s weighted-average cost of capital? Round your answer to two decimal places. %
- Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture of office supplies. To be able to assess the financial capabilities of the company, Mike has been given the companys financial statements for the 2 most recent years. Required: Note: Round all answers to two decimal places. 1. Compute the following for each year: (a) return on assets, (b) return on stockholders equity, (c) earnings per share, (d) price-earnings ratio, (e) dividend yield, and (f ) dividend payout ratio. 2. CONCEPTUAL CONNECTION Based on the analysis in Requirement 1, would you invest in the common stock of Kepler?Net profit of Harper Holding Ltd in the current year is $3,546,000. The company is planning to launch a project that will requires an investment of $1,045,000 next year. Today the company’s stock has market value of $72/share. Harper Holding Ltd has the current capital structure of 65% in equity and 35% in debt. Required:a. How much dividend can Harper Holding Ltd pay its shareholders this year and what is dividend payout ratio of the company. Assume the Residual Dividend Payout Policy applies. b. The company is paying a cash dividend of $5.50/share plus an extra-cash dividend of $2.5/share. Tomorrow the stock will go ex-dividend. Calculate the ex-dividend price tomorrow morning. Assuming the tax on dividend is 15%? c. M&T Ltd. is a daughter company of the Harper Holding and currently under a liquidation plan due to severe business contraction. The company plans to pay total dividend of $8.5 million now and $ 12.5 million one year from now as a liquidating dividend. The required…The Giant Machinery has the current capital structure of 65% equity and 35% debt. Its net income inthe current year is $250,000. The company is planning to launch a project that will require aninvestment of $175,000 next year. Currently, the share of Giant machinery is $25/share.Required:a) How much dividend Giant Machinery can pay its shareholders this year and what is the dividendpayout ratio of the company? Assume the Residual Dividend Payout Policy applies. b) If the company is paying a dividend of $2.50/share and tomorrow the stock will go ex-dividend.Calculate the ex-dividend price tomorrow morning. Assuming the tax on dividend is 15%. c) Little Equipment for Hire is a subsidiary in the Giant Machinery and currently under the liquidationplan due to the severe contraction of operation due to coronavirus. The company plans to paya total dividend of $2.5 million now and $ 7.5 million one year from now as a liquidating dividend.The required rate of return for shareholders is 12%.…
- 1 Rubenstein Bros. Clothing is expecting to pay an annual dividend per share of $0.80 out of annual earnings per share of $2.50. Currently, Rubenstein Bros. stock is selling for $11.00 per share. Adhering to the company's target capital structure, the firm has $8 million in total invested capital, of which 50% is funded by debt. Assume that the firm's book value of equity equals its market value. In past years, the firm has earned a return on equity (ROE) of 17%, which is expected to continue this year and into the foreseeable future. Retention rate x ROE.) Do not round intermediate calculations. Round your answer to two a. Based on this information, what long-run growth rate can the firm be expected to maintain? (Hint: g decimal places. b. What is the stock's required return? % R LL c. If the firm changed its dividend policy and paid an annual dividend of $1.60 per share, financial analysts would predict that the change in policy will have no effect on the firm's stock price or ROE.…Ferrell Inc. recently reported net income of $8 million. It has 710,000 shares of common stock, which currently trades at $57 a share. Ferrell continues to expand and anticipates that 1 year from now, its net income will be $13.6 million. Over the next year, it also anticipates issuing an additional 248,500 shares of stock so that 1 year from now it will have 958,500 shares of common stock. Assuming Ferrell's price/earnings ratio remains at its current level, what will be its stock price 1 year from now? Do not round intermediate calculations. Round your answer to the nearest cent.You are the new CFO of Risk Surfing Ltd, which has current assets of $7,920, net fixed assets of $17,700, current liabilities of $4,580 and long-term debts of $5,890. a. Calculate the return on assets of the company given that Return on Equity is 30%? b. What is the PE of the company total number of ordinary share outstanding of the companies is 2,000 and market price of each share is $12?
- Use the corporate valuation model to find the intrinsic value of a firm with a long run growth in FCF of 5.2% and a WACC of 8.7%. The firm has $15 million in debt and preferred stock and has 4 million shares of common stock. The FCF for the first 4 years are (in millions of dollars): $10, $2, $9, $17.$32.42$40.13$47.89$90.67Ferrell Inc. recently reported net income of $8 million. It has540,000 shares of common stock, which currently trades at $21 a share. Ferrell continuesto expand and anticipates that 1 year from now its net income will be $13.2million. Over the next year, it also anticipates issuing an additional 81,000 shares ofstock so that 1 year from now it will have 621,000 shares of common stock. AssumingFerrell’s price/earnings ratio remains at its current level, what will be its stock price1 year from now?based on the corporate valuation model , sg telecom total corporate value is $750 million. its. balance sheet shows $100 million notes payable, $200 million long term debt, $40 million common stock, and $160 million of retained earnings with a Wacc of 10%. if the company has 16 million shares of stock outstanding, what is the price per share?