From my industry research on Chester, I've learned that senior management intends to fully fund a new technology purchase by issuing 75,000 shares of stock as well as a new bond issue at the beginning of next year. My forecast indicates that this will increase Chester's leverage (assets/equity) to 2.13. I'm now examining the effects that this investment plan will have on Chester. If we assume that the stock is issued at yesterday's stock price of $40.01, which of the following conclusions are correct? I'd estimate that a third of these are right. Ronald Ronald Jefferson Board Member, Accounting & Finance | Andrews Corporation Choose all responses that apply. Total investment for Chester will be $6,391,598. ☐ Chester will issue stock totaling $3,000,750. The Chester bond issue will be $3,390,847. Total Assets will rise to $174,028,988. ☐ Long term debt will increase from $48,250,000 to $51,250,750

Use the following information to answer the question(s) below. Nielson Motors is currently an all equity financed firm. It expects to generate EBIT of $20 million over the next year. Currently Nielson has 8 million shares outstanding and its stock is trading at $20.00 per share. Nielson is considering changing its capital structure by borrowing $50 million at an interest rate of 8% and using the proceeds to repurchase shares. Assume perfect capital markets. Nielson's EPS if they change their capital structure is closest to: OA. $2.30 O B. $2.90 O C. $2.50 O D. $2.00

Golden Finance Ltd is a small investment company. It is looking for financial assets to add to its investment for 2023. As an investment officer of Golden Finance, you are interested in the following assets: • A preferred share issued by Apple Company, which pays a fixed dividend rate of 13%, face value of $100. . • A non-callable bond issued by Orange Company, which pays 9% coupon rate semi-annually, with face value $1000. The bond will mature in 20 years and has a yield to maturity of 8%. The Company Management also requested you to evaluate two mutually exclusive investment portfolios with the following cash flows to recommend one for the next year's investment: Year 2022-Initial Investment Future cash flow 2023 2024 2025 2026 Portfolio A ($) Portfolio B($) 70,000 80,000 25,000 30,000 40,000 45,000 35,000 40,000 50,000 55,000 Required: 1. Compute the current value of Apple Company's preferred share, given the rate of return for the same type of shares in the same industry is 12% 2.…

TRD company is looking to expand their operations. They are evaluating their cost of capital based on various financing options. Investment bankers informed them that they can issue new debt in the form of bonds at a cost of 8%, and issue new preferred stocks for the price of $25 per share paying $2.5 dividends per share. Their common stock is currently selling for $20 per share and will pay a dividend of $1.5 per share next year. They expect a growth rate in dividends of 5% per year, and their marginal tax rate is 35%.  a) If TRD raises capital using 45%debt,5%preferred stock,and 50%common stock. What is their cost of capital? b)If TRD raises capital using 30%debt,5%preferred stock,and65%common stock.What is their cost of capital? c)Evaluate the two finance options and identify which one they should choose?

Global Internet company is looking to expand their operations. They are evaluating their cost of capital based on various financing options. Investment bankers informed them that they can issue new debt in the form of bonds at a cost of 8%, and issue new preferred stocks for the price of $25 per share paying $2.5 dividends per share. Their common stock is currently selling for $20 per share and will pay a dividend of $1.5 per share next year. They expect a growth rate in dividends of 5% per year, and their marginal tax rate is 35%.   If Global raises capital using 45% debt, 5% preferred stock, and 50% common stock what is their cost of capital?

Micron Industries is also considering a Class B issue of its common stock on the market via an Initial Public Offering (IPO) in late 2021. The company is expected to pay the following dividends over the next 4 years: $2.00, $3.00, $3.50 and $4.50. Thereafter, the company is expected to increase dividends by an annual rate of 6%. Required: Assuming investors would require a return of 12% on this riskier type of investment, how much would an investor pay for this share today?   Micron Industries is also assiduously finalising the issuance of its preference shares. The company plans to pay an annual dividend of $6.20 on each preferred share and anticipates investors required return to be around 10%. Required: Compute the price at which Micron Industries should issue these preferred shares.

Global Internet company is looking to expand their operations. They are evaluating their cost of capital based on various financing options. Investment bankers informed them that they can issue new debt in the form of bonds at a cost of 8%, and issue new preferred stocks for the price of $25 per share paying $2.5 dividends per share. Their common stock is currently selling for $20 per share and will pay a dividend of $1.5 per share next year. They expect a growth rate in dividends of 5% per year, and their marginal tax rate is 35%. a)      If Global raises capital using 45% debt, 5% preferred stock, and 50% common stock what is their cost of capital?  b)      If Global raises capital using 30% debt, 5% preferred stock, and 65% common stock what is their cost of capital? c)    Evaluate the two finance options and identify which one they should choose? Assess the advantages and disadvantages of your choice?

Global Internet company is looking to expand their operations. They are evaluating their cost of capital based on various financing options. Investment bankers informed them that they can issue new debt in the form of bonds at a cost of 8%, and issue new preferred stocks for the price of $25 per share paying $2.5 dividends per share. Their common stock is currently selling for $20 per share and will pay a dividend of $1.5 per share next year. They expect a growth rate in dividends of 5% per year, and their marginal tax rate is 35%.   If Global raises capital using 45% debt, 5% preferred stock, and 50% common stock what is their cost of capital? [Note: you are supposed to show every step of your calculation and interpret the result.] If Global raises capital using 30% debt, 5% preferred stock, and 65% common stock what is their cost of capital? [Note: you are supposed to show every step of your calculation and interpret the result.] Evaluate the two finance options and identify which…

Global Internet company is looking to expand their operations. They are evaluating their cost of capital based on various financing options. Investment bankers informed them that they can issue new debt in the form of bonds at a cost of 8%, and issue new preferred stocks for the price of $25 per share paying $2.5 dividends per share. Their common stock is currently selling for $20 per share and will pay a dividend of $1.5 per share next year. They expect a growth rate in dividends of 5% per year, and their marginal tax rate is 35%.    a) If Global raises capital using 45% debt, 5% preferred stock, and 50% common stock what is their cost of capital? [Note: you are supposed to show every step of your calculation and interpret the result.] b) If Global raises capital using 30% debt, 5% preferred stock, and 65% common stock what is their cost of capital? [Note: you are supposed to show every step of your calculation and interpret the result. c) Evaluate the two finance options and identify…

Global Internet company is looking to expand their operations. They are evaluating their cost of capital based on various financing options. Investment bankers informed them that they can issue new debt in the form of bonds at a cost of 8%, and issue new preferred stocks for the price of $25 per share paying $2.5 dividends per share. Their common stock is currently selling for $20 per share and will pay a dividend of $1.5 per share next year. They expect a growth rate in dividends of 5% per year, and their marginal tax rate is 35%. If Global raises capital using 30% debt, 5% preferred stock, and 65% common stock what is their cost of capital? [Note: you are supposed to show every step of your calculation and interpret the result.]    If Global raises capital using 45% debt, 5% preferred stock, and 50% common stock what is their cost of capital? [Note: you are supposed to show every step of your calculation and interpret the result.]