Monmouth Report

In the open market share repurchase, the firm may or may not declare the repurchase. Depending on the market condition and the firm’s position in the industry, the firm can decide when and how many

If the company did go public, its share price should be $384.37 for per share with the rapid growth scenario.

30-1     This Section provides guidance on measuring amounts that arise from repurchases of an entity 's own outstanding common stock. The measurement issues addressed include both of the following:

We use Capital Asset Pricing Model (CAPM) approach to calculate the cost of equity. The formula of CAPM is re = rf + β × (E[RMkt] – rf).

a) How many shares will the firm have to issue, assuming they issue the new shares at the current price per share?

We assume that Telus maintains a fixed debt to equity ratio and hence, the calculation will include preferred shares. 5.00 percent of cost in the past cannot be used towards final calculation

Market value per share = Book value per share = $12,000 / 750 shares = $16 per share

3. At what price would you recommend that Rosetta Stone shares be sold?Rosetta Stone: Pricing the 2009 IPO

24) A firm has assets of $250 million, of which $25 million is cash. It has debt of $100 million. If the firm were to repurchase $10 million of its stock, what would its new debt-to-equity ratio be?

Based on information given, we established the free cash flows from operations for Torrington, for the period 1999 to 2007. We made the assumption that net working capital was 7% of sales for Torrington, based on historic patterns. From this assumption, we found “Change in Net Working Capital” for the selected years. Next, we chose a value for “Capital Expenditures”, again based on historic patterns. From this we computed the “Free Cash Flows to the Firm”.

Current market prices: Both McCaw and AT&T’s common shares are publicly traded. The market value of the equity can be summed with the book value of debt to give a rough estimate of the firm’s current value. The calculation that follows suggests a value for McCaw’s assets of about $10.5 billion. McCaw’s shares may be trading at a minority discount, because the CEO holds a controlling block of shares. To purchase a partial

(Note: retained earnings information is irrelevant here) Part b. Total market value = debt + pref. equity + Common equity = 1,147,200 + 1,250,000 + 2,500,000 = $4,897,200

SRC offers superior returns on common equity (ROCE). This undoubtedly reflects the greater amount of debt in the capital structure vis a vis WM, and a stronger gross margin. However, SRC’s ROCE has declined in the last year mainly because a reaffirmation charge (40% of Net Income) generated in lawsuits and a possible violation of the United States Bankruptcy Code. We need to highlight the uncertainty associated with the reaffirmation charge; this means that the actual results can differ from the

9) Decision time! Based on these and possibly other considerations, should Monmouth bid for Robertson? If yes, what level and terms do you suggest? (10 lines max).

1.One being an IPO offering, requiring the sale of less than 9% of the company. This offering will be for 3.5 million shares, with an expected sale price at between $14 and $18 per share.