Let 's go back to the Double R Nutting Company Suppose that Double R 's bonds have a face value of $50 Its current market value balance sheet is Who would gain or lose from the following maneuvers a Double R pays a $10 cash dividend b Double R halts operations, sells its fixed assets for $6, and co...

a Stockholders gain and bondholders lose Bond value decreases because the value of assets securing t ...

Let's go back to the Double-R Nutting Company. Suppose that Double-R's bonds have a face value of

Question:

Let's go back to the Double-R Nutting Company. Suppose that Double-R's bonds have a of $50. Its current market-value is:

Who would gain or lose from the following maneuvers?
a. Double-R pays a $10 cash dividend.
b. Double-R halts operations, sells its fixed assets for $6, and converts net working capital into $20 cash. It invests its $26 in Treasury bills.
c. Double-R encounters an investment opportunity requiring a $10 initial investment with NPV = $0. It borrows $10 to finance the project by issuing more bonds with the same security, seniority, and so on, as the existing bonds.
d. Double-R finances the investment opportunity in part (c) by issuing more common stock.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...