Evaluate the following statement in relation to the Mondi Plc Group: "A firm can reduce its currency exposure by diversifying across different lines of business."

what are Mondi plc's economic and competitive exposure, and where do they come from. How you would go about addressing their economic exposure? How would your solution benefit the Group beyond its current hedging strategy?

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de la Portilla food stores, a family owned grocery store chain headquartered in Refugio, Texas, is considering a major expansion. The proposed expansion would require de la Portilla to raise $80 million in additional capital. Because de la Portilla currently has a debt ratio of 50 percent, and because the family members have all their funds tied up in the business, the owners cannot supply any additional equity. So the company will have to sell shares of the company to the public. However, the family wants to insure they retain control of the company. This would be de la Portilla's first stock sale, and the owners are not sure just what would be involved. Therefore, they have asked you to research the process and to help them decide exactly how to raise the needed capital. In doing so, you should answer the following questions:

5. What does the term listed stock mean? Do you believe de la Portilla shares would be listed shortly after the company goes public? If not, where would the shares trade?

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(B&C), a small jewelry manufacturer, has been successful and has enjoyed a positive growth trend. Now B&C is planning to go public with an issue of common stock, and it faces the problem of setting an appropriate price for the stock. The company and its investment banks believe that the proper procedure is to conduct a valuation and select several similar firms with publicly traded common stock and to make relevant comparisons.

Several jewelry manufacturers are reasonably similar to B&C with respect to product mix, asset composition, and debt/equity proportions. Of these companies, Abercrombe Jewelers and Gunter Fashions are most similar. When analyzing the following data, assume that the most recent year has been reasonably "normal" in the sense that it was neither especially good nor especially bad in terms of sales, earnings, and free cash flows. Abercrombe is listed on the AMEX and Gunter on the NYSE, while B&C will be traded in the Nasdaq market.

1. Company dataAbercrombeGunterB&CShares outstanding4 million10 million500,000Price per share$34.00$46.00NAEarnings per share$2.20$3.13$2.60Free cash flow per share$1.63$2.54$1.90Book value per share$16.00$24.00$18.00Total assets$99 million$290 million$12 millionTotal debt$35 million$50 million$3 millionB&C is a closely held corporation with only 500,000 shares outstanding. Free cash flows have been low and in some years negative due to B&C's recent high sales growth rates, but as its expansion phase comes to an end B&C's free cash flows should increase. B&C anticipates the following free cash flows over the next 5 years:
2. Year12345FCF$1,000,000$1,050,000$1,208,000$1,329,000$1,462,000
3. After Year 5, free cash flow growth will be stable at 7% per year. Currently, B&C has no non-operating assets, and its WACC is 12%. Using the free cash flow valuation model, estimate B&C's intrinsic value of equity and intrinsic per share price. Do not round intermediate calculations. Round your answers for the value of equity to the nearest dollar and for the value of equity per share to the nearest cent.
4. Value of equity$
5. Per share value of equity$
6. Calculate debt to total assets, P/E, market to book, P/FCF, and ROE for Abercrombe, Gunter, and B&C. For calculations that require a price for B&C, use the per share price you obtained with the corporate valuation model in Part a. Do not round intermediate calculations. Round your answers to two decimal places.
7. AbercrombeGunterB&CD/A%%%P/EMarket/BookROE%%%P/FCF
8. Using Abercrombe's and Gunter's P/E, Market/Book, and Price/FCF ratios, calculate the range of prices for B&C's stock that would be consistent with these ratios. For example, if you multiply B&C's earnings per share by Abercrombe's P/E ratio you get a price. What range of prices do you get? Do not round intermediate calculations. Round your answers to the nearest cent.
9. The range of prices:
10. from $to $

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Defense Electronics This is a comprehensive project evaluation problem bringing together much of what you have learned in this and previous chapters. Suppose you have been hired as a financial consultant to Defense Electronics, Inc. (DEI), a large publicly traded firm that is the market share leader in radar detection systems (RDSs). The company is looking at setting up a manufacturing plant overseas to produce a new line of RDSs. This will be a five-year project. In order to facilitate this project, DEI purchased some land where they will build their new manufacturing plant, which cost $4.4 million on an after-tax basis. In five years, the after-tax value of the land will be $4.8 million. The plant and equipment will cost $37 million to build. DEI's tax rate is 32 percent. The project requires $1,300,000 in initial net working capital investment to get operational. The manufacturing plant has an eight-year tax life, and DEI uses straight-line depreciation. At the end of the project (that is, the end of Year 5), the plant and equipment can be scrapped for $5.1 million. The company will incur $6,700,000 in annual fixed costs. The plan is to manufacture 15,300 RDSs per year and sell them at $11,450 per machine; the variable production costs are $9,500 per RDS. The following market data on DEI's securities are current: Debt: 210,000 6.4% coupon bonds outstanding, 25 years to maturity, selling for 110 percent of par; the bonds have a $1,000 par value each and make semiannual payments. Common stock: 8,300,000 shares outstanding, selling for $68 per share; the beta is 1.3. Preferred stock: 450,000 shares of preferred stock outstanding, selling for $79 per share with a dividend of $4.50. Market: 6 percent expected market risk premium; 3.5 percent risk-free rate. DEI uses HSOB as its lead underwriter. HSOB charges DEI 10% flotation costs on new common stock issues, 6% on new preferred stock issues, and 4% on new debt issues. Assume DEI raises all equity for new projects externally. Calculate the NPV and the IRR of the proposed project. Some notes that will help you with this case: 1- When calculating the free cash flow for time 0, remember to include flotation costs as described above. The total cost will be the cost of the land, the cost of the building, the cost of the increase in working capital, and the flotation costs. Even though we already own the land and it might appear to be a sunk cost, remember that if we weren't building the plant on the land we could use it for something else, meaning that there is an opportunity cost associated with it. Because of this, the cost of the land should be included. Be sure to put this cost under the tax line as we are dealing with after tax values. The cost of the building and working capital will require new financing and therefore financing costs. Thus the building and working capital must be adjusted for the flotation costs as discussed in section 14-7 of the 11th edition and 14-6 of the 10th edition of the text. It is not necessary to adjust the land costs since we already own the land. 2- The appropriate amount to depreciate is just the cost of the building (37,000,000). Financing costs and the cost of the land should not be included. 3- In year 5, remember to include the salvage value of the land. Because the value that you are given is an after tax amount, be sure to put it under the tax line. Also remember that although the working capital will be recovered at the end of the project, the financing costs from working capital will not.

What is the YTM

What is the cost of preferred stock?

What is the rate of equity?

What is the after tax cost of debt?

What is the market value of the debt in dollars?

What is the market value of the firm?

Preferred stock what portion of the capital structure of the firm?

What is the weighted cost of equity?

What is the weighted average cost of capital?

What is the weighted floatation cost of debt?

What is the weighted average floatation cost?

What is the total floatation cost?

What is the Free cash flow for time periods 1-4?

What is the NPV of the project?

What is the IRR of the project?

Commercial Banking. You are a corporate account officer with TLTF ("Too Large To 100 Fail") Bank. One of your major clients just sold a piece of customized machinery to be delivered in one year's time. The company's CFO inquires about the possibilities of investing USD 10 m in a year from now for one year. (a) What kind of investment opportunity (contract) would you suggest to them? 3 (b) Currently, 1-year and 2-year spot rates are 6.50% and 7.25%, respectively. Quote a return for the preceding investment suggestion. Since your customer is of a somewhat suspicious nature you need to indicate the formula used to derive the quote. (c) What alternative investments could you suggest to your customer? (d) Define the forward curve. Why or why not is it a good predictor of future interest rates?