This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Derek's Dinghies and Rafts (DDR) is the world's largest manufacturer of rowboats and rafts. At the ... (Read 71 times)

SAVANNAHHOOPER23

  • Hero Member
  • *****
  • Posts: 542
on: Apr 25, 2021
Derek's Dinghies and Rafts (DDR) is the world's largest manufacturer of rowboats and rafts. At the end of the current year, analysts expect DDR's EBIT to be $2M and they expect the same earnings annually in perpetuity. DDR's shareholders require a return of 12.5% and there are 5M common shares outstanding. DDR has debt with a total face value of $5M. The bonds have an annual coupon of 3%, are rated AAA and yield 3%. The CFO of DDR believes that the company is under-levered. To increase the leverage, the CFO proposes to repurchase 1.2M shares at a price of $1.25 per share. The repurchase will be financed by additional borrowing. The corporate tax rate is 40%. What is the value of the company prior to the repurchase, and what is the stock price after the repurchase?
◦ Value (prior) = $9.6M; Stock price (after) = $1.50
◦ Value (prior) = $9.6M; Stock price (after) = $1.14
◦ Value (prior) = $13.9M; Stock price (after) = $2.10
◦ Value (prior) = $11.6M; Stock price (after) = $1.14
◦ Value (prior) = $11.6M; Stock price (after) = $3.21
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
Buy Test-Bank


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by SAVANNAHHOOPER23 on Apr 25, 2021

jomama

  • Sr. Member
  • ****
  • Posts: 346
Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
Answer Preview
Only 45% of students answer this correctly


SAVANNAHHOOPER23

  • Member
  • Posts: 542
Reply 2 on: Apr 25, 2021
Wow, this really help

tanna.moeller

  • Member
  • Posts: 328
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

The Food and Drug Administration has approved Risperdal, an adult antipsychotic drug, for the symptomatic treatment of irritability in children and adolescents with autism. The approval is the first for the use of a drug to treat behaviors associated with autism in children. These behaviors are included under the general heading of irritability and include aggression, deliberate self-injury, and temper tantrums.

Did you know?

Children with strabismus (crossed eyes) can be treated. They are not able to outgrow this condition on their own, but with help, it can be more easily corrected at a younger age. It is important for infants to have eye examinations as early as possible in their development and then another at age 2 years.

Did you know?

It is believed that humans initially contracted crabs from gorillas about 3 million years ago from either sleeping in gorilla nests or eating the apes.

Did you know?

Though methadone is often used to treat dependency on other opioids, the drug itself can be abused. Crushing or snorting methadone can achieve the opiate "rush" desired by addicts. Improper use such as these can lead to a dangerous dependency on methadone. This drug now accounts for nearly one-third of opioid-related deaths.

Did you know?

Alzheimer's disease affects only about 10% of people older than 65 years of age. Most forms of decreased mental function and dementia are caused by disuse (letting the mind get lazy).

Cast of Isotelus rex, the largest known trilobite from the middle to upper Ordovician of North Ameri Cast of Isotelus rex, the largest known trilobite from the middle to upper Ordovician of North Ameri
THE WORLD'S BIGGEST SALE THE WORLD'S BIGGEST SALE
Routes for the human colonization of the New World and Pacific islands. Routes for the human colonization of the New World and Pacific islands.
Population growth in India, China, Africa, and other countries in the developing world Population growth in India, China, Africa, and other countries in the developing world
The inequality of per capita emissions between the developed world and the developing world The inequality of per capita emissions between the developed world and the developing world
Köppen Climates of the World Köppen Climates of the World
Video: Bulk flow - Factors that influence bulk flow

For a complete list of videos, visit our video library