QUESTION Mini Case Yanzhou (china) Bids for Felix Resources (Australia) Mini Case Yanzhou (china) Bids for Felix Resources (Australia) 1 When should stockholders doubt their own company?s support of a friendly acquisition? 2 What is your assessment of the stipulation placed on the acquisition by the Australian government? 3 Which of the various valuation techniques […]
QUESTION Q1)James Corporation is considering the credit application of a customer. The customer is expected to buy $5000 worth of material from James every month in future, and pay for it within a month. There is a 20% probability that the customer may default on his monthly payment. If that happens, then James will not […]
QUESTION Interpreting Profitability, Liquidity, Solvency, and P/E RatiosMattel and Hasbro are the two biggest makers of games and toys in the world. Mattel sells nearly $6 billion of products each year while annual sales of Hasbro products exceed $4 billion. Compare the two companies as a potential investment based on the following ratios:RatioMattelHasbroGross profit percentage […]
QUESTION P r o f its v e r sus Cash Fl o w . Butterfly Tractors had $14 million in sales last year. Cost of goods sold was $8 million, depreciation expense was $2 million, interest payment on out- standing debt was $1 million, and the firms tax rate was 35 percent. a. What […]
QUESTION Bootst r ap Gam e . The Muck and Slurry merger has fallen through (see Section 6.3). But World Enterprises is determined to report earnings per share of $2.67. It therefore acquires the Wheelrim and Axle Company. You are given the following facts: W o r ld Ente r prises Wheelrim and Axle Me […]
QUESTION Equity Accounts. The authorized share capital of the Alfred Cake Company is 100,000 shares. The equity is currently shown in the companys books as follows: Common stock ($1.00 par value) $ 60,000 Additional paid-in capital 10,000 Retained earnings 30,000 Common equity 100,000 Treasury stock (2,000 shares) 5,000 Net common equity 95,000 a. How many […]
QUESTION Scenario Ana l ysis. The most likely outcomes for a particular project are estimated as follows: Unit price: $50 Variable cost: $30 Fixed cost: $300,000 Expected sales: 30,000 units per year However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 10 […]
QUESTION Calculating W A CC. Find the WACC of William Tell Computers. The total book value of the firms equity is $10 million; book value per share is $20. The stock sells for a price of $30 per share, and the cost of equity is 15 percent. The firms bonds have a par value of […]
QUESTION CAPM and Hu r dle Rates. A project under consideration has an internal rate of return of 14 percent and a beta of .6. The risk-free rate is 5 percent and the expected rate of return on the market portfolio is 14 percent. a. Should the project be accepted? b. Should the project be […]
QUESTION Stock V alues. Integrated Potato Chips paid a $1 per share dividend yeste r da y . You expect the dividend to grow steadily at a rate of 4 percent per year. a. What is the expected dividend in each of the next 3 years? b. If the discount rate for the stock is […]
