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NEW QUESTION: 1
Lascheid Enterprises is an all-equity firm with 175,000 shares outstanding. The company's stock price is currently $80 a share. The company's EBIT is $2,000,000 and is expected to remain constant over time.
The company pays out all of its earning each year--so its earnings per share equals its dividends per share. The firm's tax rate is 30 percent. The company is considering issuing $800,000 worth of bonds and using the proceeds for a stock repurchase. If issued the bonds would have an estimated yield to maturity of
8 percent. The risk-free rate is 5 percent and the market risk premium is also 5 percent. The company's beta is currently 1.0, but its investment banker's estimate that the company's beta would rise to 1.2 if they proceeded with the recapitalization. What would be the company's stock price following the repurchase transaction.
A. $102.63
B. $70.40
C. $106.67
D. $77.14
E. $74.67
Answer: E
Explanation:
Explanation/Reference:
Explanation:
The bonds used in the repurchase will create a new interest expense for the company. This will change net income. Dividends per share will change because net income changes and the number of shares outstanding changes.
New interest expense: $800,000 x 8% = $64,000.
New net income: ($2,000,000 - $64,000)(1 - 0.3) = $1,355,200.
Shares repurchased: $800,000/80 = 10,000 shares.
New shares outstanding: 175,000 - 10,000 = 165,000 shares.
New dividends per share: $1,355,200/165,000 = $8.21.
We must also calculate a new cost of equity: 5% + (5%)1.2 = 11%.
New stock price: $8.21/11% = $74.67.

NEW QUESTION: 2

A. Option D
B. Option B
C. Option C
D. Option A
Answer: D

NEW QUESTION: 3
DRAG DROP
You have the following class. (Line numbers are included for reference only.)

You need to complete the doOperation method to meet the following requirements:
If AddNumb is passed as the operationName parameter, the AddNumb function is called.

If SubNumb is passed as the operationName parameter, the SubNumb function is called.

Which code should you insert at line 16? Develop the solution by selecting and arranging the required code blocks in the correct order. You may not need all of the code blocks.
Select and Place:

Answer:
Explanation:

Explanation/Reference:
Explanation:
Note:
target 2:
GetType() is a method you call on individual objects, to get the execution-time type of the object.
Reference: What is the difference of getting Type by using GetType() and typeof()?
http://stackoverflow.com/questions/11312111/when-and-where-to-use-gettype-or-typeof