Metapath

What is the correct capital structure and weighted average cost of capital for discounting the investment’s free cash flow?

2) What are Linear’s financing needs? Should Linear return cash to its shareholders? What are the tax consequences of keeping cash inside the firm?

The firm has decided to increase the debt finance component portion from 20% to 30% which is a good decision since the interest payments are 100% tax deductible. The appropriate capital structure would be to

MCI would be better to keep its capital structure of 55% debt. The cost of equity is high because raising more equity will dilute the value for existing shareholders. Due to the fact that MCI has a high leverage, it is not feasible to issue debt. Additionally, MCI has exhausted the line of credit from the banks and used convertible debentures frequently. MCI belongs to a competitive and regulatory industry. The high leverage will limit its potential to grow. In exhibit 8, MCI does not have a bond rating. The convertible bond allowed the company to raise capital and convert to equity later. The interest coverage ratio of AT&T is 3.6X whereas that of MCI is 4.2X. After increasing the market share, the company can obtain a bond rating by decreasing its financial leverage.

Operating cash flow was not enough to cover capital investments (this firm does not to appear to pay dividends as it does not show in the prior 3 years). The firm is financing it operations from the issuance of common stock. $23,082 was raised during the period, which is covering its investments in capital expenditures.

2. New bank credit facility, 600 million cash on hand to take advantage of opportunities that may arise

As shown in the ratios chart, working capital has increased by $13M. Maturities of short-term investments and cash flow from operations are projected to be sufficient to sustain the company’s overall financing needs, including capital expenditures. The following corporate strategic plan identifies a project that needs financial backing.

The Hero’s journey, or in its more correct terminology the Monomyth is an object from the area of comparative mythology. Its definition in the most basic of forms, it is a pattern or outline that is used in storytelling, usually the myth. This pattern is found in many famous pieces from all around the world. In the book The Hero with a Thousand Faces from 1949 by author Joseph Campbell, this pattern is described in detail. Campbell describes that numerous myths from different times and areas of the world seem to share an identical structure in their storytelling. He summarized this with a well-known quote found at the intro of his book:

The statement of cash flows outlines some of the changes to the capital structure. The company added $164.5 million in a consolidated loan facility, and it paid out $138.1 million in dividends. There were no share buybacks during the year. The company states in the annual report (p.4) that it intends to maintain a conservative gearing ratio. The company in this section attributes its increased borrowings to projects and opportunities on which it has embarked. These investments lie within the integrated retail, franchise and property system. One of the

Because of the fact that BHC is a new venture ; the risk is actually high. Mortgage rate appears to compensate for the risk.When BHC had acquired $2,275,000 with a mortgage.

Nearly There designs, develops, manufactures and sells various navigation products and services. They are a public company registered with the SEC and their common stock trades on the stock exchange. The Company is well capitalized with a $100 million market capitalization for its common stock. Due to R&D expenses and slumping sales, Nearly There is in the need of additional capital. The Company's solution was to issue 5 million shares of Series B preferred stock at $1.20 per share. The proceeds received by the company totaled $5.9 million. The important terms of the Series B preferred stock included dividends, voting rights, conversion options, conversion price adjustment,

The effect of financial leverage on the cost of equity is prevalent in the Modigliani-Miller capital structure theory. Since the financial leverage increases the cost of equity, it can be considered one of the disadvantages of borrowing. As shown in Appendix A, the cost of equity, at each debt to capital ratio, increases by 0.1% as the financial leverage increases by 10%. With a higher

The case is set in the context of RJR’s 1985 financing of its $4.9 billion acquisition of Nabisco Brands Inc. To finance the acquisition, RJR was proposing the issue of $1.2 billion of 12 year notes and the same amount in preferred stock. It had already funded $1.5 billion of the acquisition leaving $1 billion more to finance.

1991 public stock offering had been sufficient to meet its financing needs. As of 2012, the capital

The investment banker commented that Blaine was “over-liquid and under-levered” due to the fact that Blaine was debt-free and also held $231 million in cash, a 39% of its total assets. The pros of this type of capital structure are that it gives the company more freedom when making business decision and disturbing its cash. And the company with more liquidity reacts quicker under an economic or industry hardship. The cons of this type of capital structure are that it is wasting the potential of expanding its business by leveraging/borrowing. Too large of a cash position also signal waste as the funds are generating very little return as well as make the company a takeover target. The shareholders generally expect the company