You have run a series of regressions of firm value changes at Motorola, the semiconductor company, against changes in a number of macroeconomic variables. The results are summarized here:
Change in Firm Value = 0.05 − 3.87(Change in Long − Term Interest Rate)
Change in Firm Value = 0.02 + 5.76(Change in Real GNP)
Change in Firm Value = 0.04 − 2.59 (Inflation Rate)
Change in Firm Value = 0.05 − 3.40($∕DM)
a. Based on these regressions, how would you design Motorola’s financing?
b. Motorola, similar to all semiconductor companies, is sensitive to the health of high technology companies. Is there any special feature you can add to the debt to reflect this dependence?