Compute the unlevered beta corrected for cash for each firm. B. Using the unlevered beta corrected for cash, calculate the unlevered beta of Textron after the acquisition. C.Using the unlevered beta corrected for cash, calculate the unlevered beta of Textron after the acquisition.
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A. Compute the unlevered beta corrected for cash for each firm.
B. Using the unlevered beta corrected for cash, calculate the unlevered beta of Textron
after the acquisition.
C.Using the unlevered beta corrected for cash, calculate the unlevered beta of Textron
after the acquisition.
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- On January 1, 2001, X.Co purchased marketable equity securities at its market value of P5,000,000, while the company also paid commission, taxes and other transaction costs amounting to P200,000. The securities had the following market value on the these dates: December 31, 2001 4,700,000 December 31, 2002 5,300,000 No securities were sold during 2001 and 2002. What amount of unrealized gain or loss should be reported in the 2002 income statement if the securities were held for trading?You're given the following details of an acquisition of Target Co. by Acquirer Ltd.. What is the transaction value for this acquisition of Target Co.? Acquisition of Target Co. by Acquirer Ltd. Target Share Price ($/sh.) $85.40 Acquisition Premium 15% Diluted Shares Outstanding (MM) 670 Target Total Debt $3,562 Target Cash and Cash Equivalents $5,147 % Debt Financing 40% % Equity Financing 60% Equity Financing Fees 4.0% Debt Financing Fees 1.5% Other Transaction Costs $800Safety Development Corporation had relatively large idle cash balances and invested them as follows in securities to be held as non-strategic investments: 2020 Feb. 7 Purchased 3,700 common shares of Royal Bank at $28.00, plus $500 in transaction fees. 19 Purchased 2,700 common shares of Imperial Oil at $55.50, and paid $250 in transaction fees. Apr. 1 Paid $103,069 plus $500 in transaction fees for a 7.40%, four-year, $105,000 Minco Inc. bond that pays interest quarterly beginning June 30. The market rate of interest on this date was 7.80%. Sellers Corporation plans to hold this investment for the duration of the bond’s contract life. May 26 Purchased 3,500 common shares of BCE at $14.88, plus $200 in transaction fees. June 1 Received a $0.25 per share cash dividend on the Royal Bank common shares. 17 Sold 2,700 Royal Bank common shares at $28.50. 30 Received interest on the Minco Inc. bond. Aug. 5 Received a $0.50 per share cash dividend on the…
- Here are book- and market-value balance sheets of the United Frypan Company (figures in $ millions): Book-Value Balance Sheet Net working capital $ 25 Debt $ 60 Long-term assets 75 Equity 40 $ 100 $ 100 Market-Value Balance Sheet Net working capital $ 25 Debt $ 60 Long-term assets 180 Equity 145 $ 205 $ 205 Assume that MM’s theory holds except for taxes. There is no growth, and the $60 of debt is expected to be permanent. Assume a 21% corporate tax rate. a. How much of the firm's market value is accounted for by the debt-generated tax shield? (Enter your answer in million rounded to 2 decimal places.) b. What is United Frypan’s after-tax WACC if rDebt = 6.7% and rEquity = 16.3%? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. Now suppose that Congress passes a law that eliminates the deductibility of interest for tax purposes after a grace period of 5 years. What will be…Bombay Company's book and market value balance sheets are as follows: (NWC = net working capital; LTA = long term assets; D = debt; E = equity; V = firm value): Book Values Market Values NWC 200 500 D NWC 200 500 D LTA 2,300 2,00 E LTA 2,800 2,500 E 2,500 2,500 V 3,000 3,000 V According to MM's Proposition I corrected for taxes, what will be the change in company value if Bombay issues $200 of equity and uses it to make a permanent reduction in the company's debt? Assume a 21 percent marginal corporate tax rate. Multiple Choice A) +$70 B) −$42 C) $0 D) +$140 Please show your workFounded on January 1, 20X1, Gehl Company had the following passive investments in equity securities at the end of 20X1 and 20X2: Equity Security Cost 12/31/X2 Fair Value A $ 96,000 $ 94,000 B 184,000 162,000 C 126,000 136,000 Required: If the company recorded a $4,000 debit to its Fair value adjustment account as its 20X2 fair value adjustment, what must have been the unrealized gain or loss reported at the end of 20X1?
- Continental Bank, a nationwide banking company, owns many types of investments.Continental paid $550,000 for equity securities on December 5. Continental owns less than10% of the stock of the companies in which it invests. Two weeks later, Continental received a$37,000 cash dividend. On December 31, these equity securities were quoted at a market priceof $554,000. Continental’s December income statement would include ana. unrealized loss of $4,000.b. unrealized gain of $41,000.c. unrealized gain of $4,000.d. unrealized loss of $41,000.Continental Bank, a nationwide banking company, owns many types of investments.Continental paid $550,000 for equity securities on December 5. Continental owns less than10% of the stock of the companies in which it invests. Two weeks later, Continental received a$37,000 cash dividend. On December 31, these equity securities were quoted at a market priceof $554,000. Continental’s December income statement would include ana. unrealized loss of $4,000.b. unrealized gain of $41,000.c. unrealized gain of $4,000.d. unrealized loss of $41,000.E-Q-33. Refer to the Continental data in E-Q-32. On December 31, Continental’s balancesheet should reporta. dividend revenue of $37,000.b. investment in equity securities of $554,000.c. investment in equity securities of $550,000.d. an unrealized gain of $4,000.ABC Company is experiencing financial difficulty and is negotiating debt restructuring with its creditors to relieve its financial stress. ABC has a P2,500,000 noted payable to XYZ Bank. The bank is considering acceptance of an equity interest in ABC Company in the form of 200,000 ordinary shares valued at P12 per share. The par value is P10 per share. How much share premium should be recognized from the debt restructuring? Group of answer choices a. 500,000 b. 100,000 c. 400,000 d. 0
- Here are book- and market-value balance sheets of the United Frypan Company (figures in $ millions): Book-Value Balance Sheet Net working capital $ 50 Debt $ 70 Long-term assets 50 Equity 30 $ 100 $ 100 Market-Value Balance Sheet Net working capital $ 50 Debt $ 70 Long-term assets 160 Equity 140 $ 210 $ 210 Assume that MM’s theory holds except for taxes. There is no growth, and the $70 of debt is expected to be permanent. Assume a 21% corporate tax rate. a. How much of the firm's market value is accounted for by the debt-generated tax shield? (Enter your answer in million rounded to 2 decimal places.) b. What is United Frypan’s after-tax WACC if rDebt = 6.3% and rEquity = 16.7%? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. Now suppose that Congress passes a law that eliminates the deductibility of interest for tax purposes after a grace period of 5 years. What will be…Seal Company is experiencing financial difficulty and is negotiating debt restructuring with its creditor to relieve its financial stress. Seal has a P2,500,000 note payable to United Bank. The bank accepted an equity interest in Seal Company in the form of 200,000 ordinary shares quoted at P12 per share. The par value is P10 per share. The fair value of the note payable on the date of restructuring is P2,200,000. What amount should be recognized as share premium from the issuance of the shares? a. 500,000 b. 100,000 c. 400,000 d. 200,0004. Baguio Company is experiencing financial difficulty and is negotiating debt restructuring with its creditor to relieve its financial stress. Baguio company has a P2,000,000 note payable to First Bank. The bank is considering two alternatives. 1. Acceptance of land owned by Baguio company valued at P1,600,000 and carried at its historical cost of P1,120,000. 2. Acceptance of an equity interest in Baguio company in the form of 16,000 shares with fair value of P120 per share. The share capital has a par value of P100 per share. Under the first alternative, what is the amount of gain/(loss) on extinguishment of debt?
