Question
MiniMickey currently has 30 000 shares outstanding. Each share has a market value of 20. If the firm pays 5 per share in dividends, what
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MiniMickey currently has 30 000 shares outstanding. Each share has a market value of 20.
If the firm pays 5 per share in dividends, what will the value of each share be worth after
the dividend payment? Ignore taxes.
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b) Company F plans to raise 10 000 in new equity this year and wants to pay a dividend to
shareholders of 30 000 in total. The firm must pay 20 000 interest during the year and will also pay down principal on its debt obligations by 10 000. If the firm continues with its capital budgeting plan, it will require 100 000 for capital expenditures during the year. Given the above information, how much cash must be provided from operations for the firm to meet its plan?
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c) Company G is currently financed with 50 per cent debt and 50 per cent equity. The firm pays USD125 each year to its debt investors (at a 10 per cent cost of debt) and the debt has no maturity date. What will be the value of the equity if the firm repurchases all of its debt and raises the funds by issuing equity? Assume that all of the assumptions in Modigliani and Millers Proposition 1 hold
Need asap. Thanks
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