• Unlevered Firm vs. a Levered Firm with the same assets. Recapitalization of Trans Am Corporation. Debt issue of $4,000,000 at 10% to buy back equity. Alternatively, you may view them as two companies that differ only in their capital structure. Current Proposed Assets $8,000,000 8,000,000 Debt 0 4,000,000 Equity 8,000,000 4,000,000 Shares Outstanding 400,000 200,000 Share price $20 $20 Trans Am Corporation - without debt Recession
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INVESTING IN RISKY PROJECTS When valuing a project, managers first forecast the future cash flows of the investment then discount them at the same calculated discount rate. The issue arises when managers are investing in risky projects because they tend to value the risky projects the same way they do riskless projects. Here we have highlighted the two appropriate methods used to value risky projects, the Risk-Adjusted Discount Rate method and the Certainty Equivalent Method. TRACKING PORTFOLIOS
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CAPITAL The Problem On January 1, 1997 Bunky's Burgers, Inc. is planning its yearly capital budget and is faced with a list of 5 potential independent proposals: PROJECT | OUTLAY | IRR | A | 8,000,000 | 14.0% | B | 8,000,000 | 21.0% | C | 10,000,000 | 19.0% | D | 12,000,000 | 13.5% | E | 12,000,000 | 16.0% | The firm's capital structure relations shown below are considered optimal and will be maintained: Debt | $120,000,000 | Preferred Stock | 20,000,000 | Common Equity | 60,000
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taken over the office). Yale had developed a rather different approach to endowment management, including substantial investments in less efficient equity markets such as private equity (venture capital and buyouts), real assets (real estate, timber, oil and gas), and “absolute-return” investing. This approach had generated successful, indeed enviable, returns. Swensen and his staff were proud of the record that they had compiled and believed that Yale should probably focus even more of its efforts and
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Submitted By:- Ishita Singh S143f0015 DEBT vs. EQUITY Debt vs. equity financing is one of the most important decisions facing managers who need capital to fund their business operations. Debt and equity are the two main sources of capital available to businesses, and each offers both advantages and disadvantages. "Absolutely nothing is more important to a new business than raising capital," Steve Jefferson wrote in Pacific Business News (Jefferson, 2001). "But the way that money is raised can
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Janis Pastars Dr. Muhammad R.K. Chishty Advanced Corporate Finance 2 March, 2015 Case 26 – Star River Electronics Ltd. Introduction Star River Electronics is a joint venture between England’s Starlight Electronics Ltd. and an Asian venture-capital firm, New Era Partners. Star River Electronics is based in Singapore, and its mission was to manufacture CD-ROMs as a supplier to major software companies. Star River Electronics has gained fame in the industry for producing high quality discs
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shareholders’ objectives. Firms with more outsiders on their boards award directors more equity-based compensation. When the CEO’s power over the board increases, compensation provides weaker incentives to monitor. Firms with more inside directors and with entrenched CEOs use less equity-based pay. Furthermore, firms with entrenched CEOs and CEOs who also chair the board are less likely to replace cash pay with equity. r 2004 Elsevier B.V. All rights reserved. JEL classification: G30; G34; G38 Keywords:
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Profits after tax/Total Asset | 4.94% | 6.20% | 5.52% | 6.31% | ROEProfit after tax/ Stockholders equity | 10.84% | 13.96% | 12.56% | 12.06% | Current RatioC.A./C.L. | 1.114 | 1.066 | 1.087 | 1.053 | Quick Ratio(C.A. – Inventory)/ C.L. | 0.531 | 0.498 | 0.518 | 0.470 | Debt to Asset RatioTotal Debt/ Total Asset | 0.101 | 0.113 | 0.110 | 0.015 | Debt Equity RatioTotal Debt/ Stockholders Equity | 0.222 | 0.255 | 0.251 | 0.028 | Costco’s financial data shows there were some changes to assets
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FINANCIAL ANALYSIS OF ELECTRIFICATION Utkarsh Bhardwaj - H12120 ACCOUNTING FINANCIAL MANAGEMENT CORPORATION LTD Niraj Kumar Agarwal - H12093 RURAL Term II Section B Project Report HRM i XLRI JAMSHEDPUR, HRM BATCH OF 2012-2014 Table of Contents 1.Acknowledgement ............................................................................................................................... 1 2. Company Overview ..............................................
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1. Introduction In the developed countries Enron Xerox, WorldCom etc. had been caught of getting involved in accounting scandals since 2001, which leads to the credibility of corporate financial reports under suspicion, furthermore, shocking investors’ confidence. Consequently, corporate governance mechanism has been a crucial issue discussed again. Sarbanes-Oxley Act was enacted in 2002 to enhance corporate government mechanism which is viewed as the priority of financial revolution, in the expectation
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