Business, 25.11.2021 05:10 only1cache

Mercer Corp. has 10 million shares outstanding and $96 million worth of debt outstanding. Its current share price is $80. Mercer's equity cost of capital is 8.5%. Mercer has just announced that it will issue $346 million worth of debt. It will use the proceeds from this debt to pay off its existingâ€‹ debt, and use the remaining $250 million to pay an immediate dividend. Assume perfect capital markets. a. Estimateâ€‹ Mercer's share price just after the recapitalization isâ€‹ announced, but before the transaction occurs.
â€‹Mercer's share price just after the recapitalization isâ€‹announced, but before the transaction occurs is $80. (Round to the nearestâ€‹ dollar.)
b. Estimateâ€‹ Mercer's share price at the conclusion of the transaction. (Hintâ€‹: Use the market value balanceâ€‹ sheet.)â€‹
Mercer's share price at the conclusion of the transaction is $55. (Round to the nearestâ€‹ cent.)
c. Supposeâ€‹ Mercer's existing debt was risk free with a 4.38% expectedâ€‹ return, and its new debt is risky with a 5.01% expected return. Estimateâ€‹ Mercer's equity cost of capital after the transaction.
â€‹Mercer's equity cost of capital after the transaction is â€‹%. (Round to two decimalâ€‹ places.)

Answers: 1

Show answers

Another question on Business

Business, 22.06.2019 04:10

Universal containers(us) has an integration with its accounting system that creates tens of thousands of orders inside salesforce in a nightly batch. us wants to add automation that can attempt to match leads and contacts to these orders using the email address field on the insert. us is concerned about the performance of the automation with a large data volume. which tool should uc use to automate this process?

Answers: 1

Answer

Business, 22.06.2019 10:30

Marketing1. suppose the average price for a new disposable cell phone is $20, and the total market potential for that product is $4 million. topco, inc. has a planned market share of 10 percent. how many phones does topco have the potential to sell in this market? 20,0002. use the data from question 3 to calculate topco, inc.'s planned market share in dollars. $400,0003. atlantic car rental charges $29.95 per day to rent a mid-size automobile. pacific car rental, atlantic's main competitor, just reduced prices on all its car rentals. in response, atlantic reduced its prices by 5 percent. now how much does it cost to rent a mid-size automobile from atlantic? $28.45

Answers: 1

Answer

Business, 22.06.2019 14:50

The following information is needed to reconcile the cash balance for gourmet catering services. * a deposit of $5,600 is in transit. * outstanding checks total $1,000. * the book balance is $6,400 at february 28, 2019. * the bookkeeper recorded a $1,800 check as $17,200 in payment of the current month's rent. * the bank balance at february 28, 2019 was $17,410. * a deposit of $400 was credited by the bank for $4,000. * a customer's check for $3,300 was returned for nonsufficient funds. * the bank service charge is $90. what was the adjusted book balance?

Answers: 1

Answer

Business, 22.06.2019 15:30

Uknow what i love about i ask a dumb question it is immediately answered but when i ask a real question it take like an hour to get answered

Answers: 2

Answer

You know the right answer?

Mercer Corp. has 10 million shares outstanding and $96 million worth of debt outstanding. Its curren...

Questions