KMS Corporation has assets with a market value of $ 426 million, $ 25 million of which

Fantastic news! We've Found the answer you've been seeking!

Question:

KMS Corporation has assets with a market value of $ 426 million, $ 25 million of which are cash It has debt of $ 224 million, and $15 million shares outstanding Assume perfect capital markets

a What is its current stock price

b If KMS distributes $ 25 million as a dividend, what will its share price be after the dividend is paid

c If instead, KMS distributes $ 25 million as a share repurchase, what will its share price be once the shares are repurchased

d What will its new market debt-equity ratio be after either transaction?

Related Book For answer-question

Introduction to Derivatives and Risk Management

ISBN: 978-1305104969

10th edition

Authors: Don M. Chance

See More Books

Posted Date: Jan 24, 2021 03:18 AM

See More Questions

A company has assets with a market value of $100. It has one outstanding bond issue, a zero coupon bond maturing in two years with a face value of $75. The risk-free rate is 5 percent. The volatility...
Assume you own a bond with a market value of $ 820 that matures in 7 years. The par value of the bond is $ 1,000. Interest payments of $ 30 are paid semiannually. What is your expected rate of return...
A company has 100,000 outstanding common shares with a market value of $20 per share. Dividends of $2 per share were paid in the current year and the company has a dividend payout ratio of 40%. The...
If net assets of a business totalled 200,000 and its total assets on that date amounted to 325,000, its liabilities would amount to: (a) 125,000 (b) 200,000 (c) 525,000 (d) Not sufficient information...
Does living in the South cause high blood pressure? Data from a group of 6278 whites and blacks questioned in the Third National Health and Nutritional Examination Survey between 1988 and 1994 (see...
Locate the instantaneous centres of the mechanisms shown in Fig.2.57(a). 14 at 24 12 14 at A 13 34 (a) Locating instantaneous centres (b) Circle diagram Fig.2.57 Four-bar mechanism
Each of the following situations has an internal control weakness. a. Betty Grable has been your trusted employee for 30 years. She performs all cash-handling and accounting duties. Betty Grable just...
What amount will be required to purchase, on a man's 40th birthday, an annuity to provide him with 30 equal semiannual payments of $1000 each, the first to be received on his 50th birthday, if...
The company Smart Inc. is a company that produces Dog Shampoo in Toronto area. The results of the company, which has been mediocre for the past couple of years, have been presented in the annual...
please assist in implementing the included functions. import utils import pilots import os.path # WEATHER FUNCTIONS def bad_visibility(visibility,minimum): """ Returns True if the visibility...
State street corp will pay dividend on common stock of 4.80 per share at the end of the year. the required return on common stock is 13.2%. the firm has a constant growth rate of 7.2%. compute the...
These are all cases where someone synthesizes brings material from two or more sources in order to new information or to support a new . When you do research, you need to go beyond what your sources...
jerrys gifts has a new project with an initial cost of 340,000 that is expected to generate cash flows of 39k for 6 years and cash flows of 50k for the following 4 years if the required return is 8%...
What is the accumulated sum of the following stream of payments? $18,143 every year at the beginning of the year for 7 years, at 3.84 percent, compounded annually. what are all the excel formulas i...
In order to understand the impact of climate change, a scientist collected measurements of average yearly sea surface temperatures from 1880 to 2012. His data is graphed below. What hypothesis might...
Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $230,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash...
On January 1, 2019, Ivanhoe Company purchased equipment for $394000. The equipment is estimated to have a salvage value of $16000 and is being depreciated over eight years under the...
Clark, PA, has been engaged to perform the audit of Kent Ltd.s financial statements for the current year. Clark is about to commence auditing Kents employee pension expense. Her preliminary enquiries...
Identify two ways to express interest rate parity based on how interest rates are quoted. Explain why, in practice, they contain the same information?
Why do higher interest rates lead to higher call option prices but lower put option prices?
Consider a stock worth $25 that can go up or down by 15 percent per period. The risk-free rate is 10 percent. Use one binomial period. a. Determine the two possible stock prices for the next period....
Answer the following questions for the cited articles of the Principles of Professional Conduct. a. Responsibilities (Article 1). To which three groups do CPAs have responsibilities? b. The Public...
What is the difference between the two following sec- tions of the Rules of Professional Conduct? a. Interpretations of the Rules. b. Ethics Rulings.
Describe the purpose of each of the following Rules of Professional Conduct. a. 101-Independence. b. 102-Integrity and Objectivity. c. 201-General Standards. d. 202-Compliance with Standards. e....

KMS Corporation has assets with a market value of $ 426 million, $ 25 million of which

Question:

Expert Answer:

a current stock price 426 224 15 1346 per share b If KMS distributes ... View the full answer

Introduction to Derivatives and Risk Management

Students also viewed these banking questions