Nile Holdings Nile: The Financial Information for Nile Holdings mil Nile Holdings Selected financial infornation as of Dec. 31, 2017 Last year's EBIT (2014) Expected EBIT (2015) Current portion of existing long-terin debt, due 2015 Interest due in 2015 on existing debt Tax rate Common stock price per share Common shares outstanding Dividends per share s S S S 125 120 24 26 35 50 20 1.5 Please refer to the financial information for Nile Holdings above. Nile must decide how to finance a $100 million investment. As a shareholder, to satisfy its funding needs for the investment opportunity, do you prefer the company issue $100 million in new debt at an interest rate of 7% and a payment of $10 million due on the debt next year or issue 2 million shares of equity at a target price of $50? a) Consider two scenarios for sales in 2015, boom with EBIT of 170 million and Bust with EBIT of 90 million. Make a decision based on expected RoE, the probability of Boom is 0.6 and the Probability of Bust is 0.4. 6) Make a decision based on expected RoE if the chances of EBIT being 120 million are 50% and equal probabilities of a boom and a bust. mil mil % S mil $ Nile Holdings Nile: The Financial Information for Nile Holdings mil Nile Holdings Selected financial infornation as of Dec. 31, 2017 Last year's EBIT (2014) Expected EBIT (2015) Current portion of existing long-terin debt, due 2015 Interest due in 2015 on existing debt Tax rate Common stock price per share Common shares outstanding Dividends per share s S S S 125 120 24 26 35 50 20 1.5 Please refer to the financial information for Nile Holdings above. Nile must decide how to finance a $100 million investment. As a shareholder, to satisfy its funding needs for the investment opportunity, do you prefer the company issue $100 million in new debt at an interest rate of 7% and a payment of $10 million due on the debt next year or issue 2 million shares of equity at a target price of $50? a) Consider two scenarios for sales in 2015, boom with EBIT of 170 million and Bust with EBIT of 90 million. Make a decision based on expected RoE, the probability of Boom is 0.6 and the Probability of Bust is 0.4. 6) Make a decision based on expected RoE if the chances of EBIT being 120 million are 50% and equal probabilities of a boom and a bust. mil mil % S mil $