Locomotive corporation is planning to repurchase part of its common stock by issuing corporate debt. as a result, the firm’s debt–equity ratio is expected to rise from 0.35 to 0.5. the firm currently has $3.6 million worth of debt outstanding. the cost of this debt is 8 percent per year. locomotive expects to have an ebit of $1.35 million per year in perpetuity. locomotive pays no taxes. a. what is the market value of locomotive corporation before and after the repurchase announcement? b. what is the expected return on the firm’s equity before the announcement of the stock repurchase plan? c. what is the expected return on the equity of an otherwise identical all-equity firm? d. what is the expected return on the firm’s equity after the announcement of the stock repurchase plan?
Answers: 1
Business, 22.06.2019 08:10
The last time he flew jet value air, juan's plane developed a fuel leak and had to make an 4) emergency landing. the time before that, his plane was grounded because of an electrical problem. juan is sure his current trip will be fraught with problems and he will once again be delayed. this is an example of the bias a) confirmation b) availability c) selective perception d) randomness
Answers: 1
Business, 22.06.2019 16:30
On april 1, the cash account balance was $46,220. during april, cash receipts totaled $248,600 and the april 30 balance was $56,770. determine the cash payments made during april.
Answers: 1
Business, 23.06.2019 00:30
Emerson has an associate degree based on the chart below how will his employment opportunities change from 2008 to 2018
Answers: 2
Business, 23.06.2019 06:00
Legal requirements, suppliers and distributors, competitors, and market profiles are contained in the element of your business plan. a. introduction b. operating plant c. industry d. business information
Answers: 1
Locomotive corporation is planning to repurchase part of its common stock by issuing corporate debt....
History, 06.05.2020 21:23
History, 06.05.2020 21:23
Biology, 06.05.2020 21:23
History, 06.05.2020 21:23
Social Studies, 06.05.2020 21:23
Chemistry, 06.05.2020 21:23