Since the company is looking to transform from Private to Public they will need to go through the process of an Initial Public offering. An initial public offering is a company’s first time offer of common stock to the general public. As a privately held company expands it may need more funds than it can obtain through borrowing. A common first step in the case of IPO’s is to obtain private equity from venture capitalist. These investors seek to invest in firms that offer high potential growth over
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FNBK 3250 Review Sheet for 3rd exam CHAPTER 10 COST OF CAPITAL Calculate cost of each capital source: After-tax (AT) cost of debt = rd(1 - T), where rd is the before-tax cost of debt and T = tax rate. Likewise, rd = AT/(1 – T). (rd = YTM on bonds) Cost of preferred stock= rp =Dp/Pp; where Dp is annual dividend payment per share and Pp is the preferred stock price per share. Cost of Retained Earnings= rs Constant growth model: rs = D1/Po + g; D1 = Do(1 + g) CAPM model rs = rrf
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Part A Sole Proprietorship: Sole Proprietorship is the easiest and least expensive way to start a business. You are in complete control of the business and are in control of all the finances. If you want to name your business anything other than your name you will need to register your fictitious business name with the State. You will register it by supplying your "Doing Business As" (DBA) name. There are also disadvantages of being a sole proprietor, you have unlimited liability and are legally
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Act of 2002 and the legacy of Enron. This act was passed after corporate scandals that involved the regulatory mismanagement and fraud of Enron. This article review will cover topics on how the Sarbanes-Oxley and the collapse of Enron in which affected the ethical decision-making processes in business environments and criminal penalties for which the act provides. Decision-Making in Business Environment “A new generation of corporate leaders has entered the boardroom since Enron’s bankruptcy in
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Definition of WACC The Weighted Average Cost of Capital (WACC) is the rate at which the firm is expected to pay for capital raised by issuing debt and equity to finance its assets. It is the minimum return that the company should earn to satisfy the needs of the debt holders and shareholders of the company. It is calculated by proportionally weighing each category of capital such as common stock, preferred stock, long term and short term debts, bonds etc. It is the discount rate used to calculate
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Responsibilities of the board. Z They reason both corporations got a score of two is because both boards do perform their responsibilities accordingly in order to function successfully, some of the responsibilities that these both have in common are that: They both look for the long term success of their corporations, meaning that shareholders interest must be put first before any personal business interests of any members of board. Determine and control in broad terms the purposes, goals, activities
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Northampton Group Inc. – Case Study Analyses: How to increase shareholder value Nicole Arends, Jenny Feng, Laura Tromp & Zilha Wever FHTMS University of Aruba Mr. Don Taylor Corporate Finance FTS 2415 March 26, 2013 Introduction This Corporate Finance paper focuses on analyzing the challenges that Northampton Group Inc. (NGI) is facing as it tries to increase shareholder value. In the case study it is stated by the firm’s major shareholders, that they believe
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Reflection 2013 -------------------------------------------------------- Kaplan University Corporate Finance MT480-01 Instructor: Craig Mayberry Cynthia Buff 03/06/2013 This document is to reflect on the things I have learned during this course and how I will use them in the future. I also discussed how I see my future as a business student and development of my professional out look on finance. Reflection 2013 During my reflection of this course I have found that I have learned a
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How do we finance our business? Financial leverage is appropriate when it is likely that a company will be able to meet its principal and interest requirements. A company with stable profits and cash flows usually is in a better position to use a large amount of financial leverage than a company with volatile profits and cash flows. Companies with predictable revenues and expenses often use a lot of financial leverage. Examples include regulated utilities that can predict revenues, based on approved
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(TILEC), Tilburg, The Netherlands AMSTERDAM • BOSTON • HEIDELBERG • LONDON • NEW YORK • OXFORD PARIS • SAN DIEGO • SAN FRANCISCO • SINGAPORE • SYDNEY • TOKYO Academic Press is an imprint of Elsevier Academic Press is an imprint of Elsevier. 30 Corporate Drive, Suite 400, Burlington, MA 01803, USA 525 B Street, Suite 1900, San Diego, California 92101-4495, USA 84 Theobald’s Road, London WC1X 8RR, UK Copyright © 2009, Elsevier Inc. All rights reserved. No part of this publication may be reproduced
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