Question: Netgear (telecom equip.) has no debt , a market value of equity of $1 billion, $218 million of cash, and an equity Beta of 1.5.Meanwhile,

Netgear (telecom equip.) hasno debt, a market value of equity of $1 billion, $218 million of cash, and an equity Beta of 1.5.Meanwhile, Evergy, Inc. (the electrical utility serving our region) has $9.1 billion of debt, a market value of equity of $15.75 billion, $107 million of cash, and an equity Beta of 0.60.

Thus these two publicly traded firms have very different capital structures.Netgear is profitable and has been for the last decade; however, the Netgear's management appears to be quite averse to debt, while quite the opposite can be stated for Evergy.Is the management of Netgear ignorant of the tax benefits of debt or does something else drive Netgear's decision to have no debt?How can one explain the sharp difference in capital structure between Netgear and Evergy?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

d (1-3); please show work. Once 1 2 3 Exhibit 6-10 Midwest Office Products: Five Orders 4 5 $610 500 1 56.100 5.000 10 10 56.100 5,000 10 10 Price Acquisition cost Number of cartons in order Number...

Netgear (telecom equip) has no debt, a market value of equity of $1 billion, $218 o million of cash, and an equity Beta of 1.5. Meanwhile, Energy has $9.1 billion of debt, a market value of equity of...

HELPPPP Hopper Laboratories Financial Information In 2015 Hopper Labs had total revenues of $110 million dollars, up from only $65 million in 2011. Hopper expects earnings to continue to grow at an...

5. Merger analysis - Free cash flow to equity (FCFE) approach Consider the following acquisition data regarding Scorecard Corp. and Orators Telecom Inc.: Scorecard Corp. is considering an acquisition...

what is the value of the Antamina project, based on the estimates in the case? INTRODUCTION It was July 15, 1998, and the finance committee of Compania Minera Antamina S.A. (CMA) had just finished...

FIN 565/465 Cases in Corporate Financial Strategies Written Analysis 1 As the newly appointed Senior Financial Analyst at Williams Companies, a prominent Oklahoma-based energy firm, you were selected...

January of 2013 brought a new year and an important new opportunity to the management team of Sterling Household Products Company. Sterling manufactured and marketed a wide line of consumer goods,...

Ifuch the proyected firamcin satements of the target corrpber. the corfipany and the projected staterrents - Orator currently has an $1 B.00 mulion market value of equity and 511 .ro mallon in debt....

5. Merger analysis - Free cash flow to equity (FCFE) approach . Consider the following acquisition data regarding Scorecard Corp. and Orators Telecom Inc. : Scorecard Corp. is considering an...

The Answer Schedule shows the points per question / answer Points available for each answer are all or nothing - must be correct answer AND in correct format Rounding of your answers should take...

Watson College includes the cost of all textbooks, lab supplies, and course packets in its tuition. Facing increasing financial pressures, Watson College is interested in predicting the costs...

Netflix had a net loss of 200,000 subscribers in its first quarter for first time in 10 years. Now it is a time for the executives of Netflix to make changes to its investment decisions. 1. What have...

Name the four financial statements. Group of answer choices Business plan, ledger, balance sheet, income statement Balance sheet, income statement, statement of cash flow, statement of shareholder...

1. The momemi uf inertia of unifo cintutur diHe about lis central axis is T. s MI uboot a tangent in its plane a oqual to 1) 21 2) 2.51 3) 151 4) 12 Three identical tines each of mais Mundradia Ra...

Imagine you are a merited student and your previous record of studies were great. recently you have moved from a big city to a small town and with very less population and your migration to the new...

24. A hydrogen atom is in the state V(F) =$300 (F) +311F) + P322 (F), where subscripts stands for n,l and m values. Which one of the following is not a correct statement? A. Given state is an...

Power systems analysis On a subject Load frequency control Q3//An isolated power station has a LFC system. The station has one generator delivering its rated power with inertia constant H= 5 sec. The...

Dynasty Electrical Engineering Company Limited has developed a new Voltage Regulator to cut down electric power consumption in production plants in the country by 30%. This they believe is cheaper,...

Create a 200 word summary on the Juvenile Justice System than and today. Describe The Juvenile system and provide a generalizable definition. Highlight the issues in the Juvenile system and why this...

Organisations that do not transform digitally are likely to fail as organisations. Discuss.

Explain what CRO is and what would be tested on an e-commerce site. Essay and discussion questions

You are a digital transformation consultant for an existing business. Create a guide to the process of digital transformation for the board, and identify the stages they need to go through.