Study Session 7: Corporate Finance
Knowing the formula hasnt worked for me. Does anyone know what I’m doing wrong:
(550000) + [$187,000/1.12^5] + [$232,500/1.12^5] = $256,020
I cannot figure out how the $187,000 discounted at the rate above is $674,093…
My brain is tired…
In the M&A chapter, I have trouble understanding the difference between
1) Leverage Buy-Out (LBO)
2) Leveraged Recapitalization
3) Share repurchase
Can someone shed the light between them?
Thank you much!
direct negotiation : purchase shares from major shareholder at premium over market price.
this is the solution for topic test : Research showed that 45% of private repurchases between 1984 and 2001 were actually made at discounts, indicating that many direct negotiation repurchases are generated by the liquidity needs of large investors who are in a weak negotiating position.
which one is correct?
Working on a mock right now, and this question seems like its an error. Not on errata though.
If a merger of a companies Pre-HHI is 1600 and Post HHI is 2000, change in HHI is 400.
A.) Possible Challenge
C.) No challenge
I thought this was obviously B. However, answer is A.
I thought the HHI index chart says to use post-merger category. Since this is over 1800, any increase of 50+ is a challenge, right?
Ths pertains to the Capital Budgeting Topic
TNOCF = ( Sale Tnew-Sal T old) +NWC inv -T( Sale Tnew- B Tnew)- (Sale Told-B Told)
Why does TNOCF( Replaceent project) include a deduction for the after tax sale value of the replaced asset when we already deduct the sale value in the initial outlay ?
Regarding the implication of increasing dividends along the company’s history, I’m a bit confused between two stated parts in the Qbank;
1. High dividend yields compared to the company’s records suggest that investors are expecting dividends to be cut. (So it is a bad signal)
2. Unexpected dividend increases generally signal to investors that a company’s prospects are strong.
I go for the second one but I need someone to clarify the missing part for me please.
I think my brain freezed, so I need help on this although I think it is lame from me.
How would a decrease in the capital gain tax rate prompt a decline in a company’s overall payout ratio.
How is capital gains related to a company’s dividend distribution, is not capital gain the gain received from a sale of an investment?
Why are companies in countries where the use of bank borrowing is relatively more prevalent than the issuance of corporate bonds tend to use more leverage?
I am lost on how to go about answering this question. Any assistence would be greatly appreciated!
Reeva Singer, an analyst with Big Lee Corporation (BLC), is evaluating more efficient higher-capacity equipment to replace existing production equipment. “Option A” involves replacing existing equipment with new equipment of identical remaining life. Characteristics of existing and new equipment under Option A appear in Exhibit 1.
When do we include the scrap value in the terminal cash flow in cash budgeting?