Robert H. Smith School of Business BUFN 740: Capital Markets Fall 2014 Tuesdays and Thursdays Aug 25‚ 2014--Oct 13‚ 2014‚ 1:00pm—2:50pm‚ VMH 1330 Instructor: Yajun Wang Office Hours: Tuesdays and Thursdays 5:00pm-6:00pm Office: VMH 4453 E-Mail: ywang22@rhsmith.umd.edu‚ Office Number: (301) 405-3412 Teaching Assistants: CP Sessions: Qi Xu‚ qi.xu@rhsmith.umd.edu (hold help sessions in CP‚ grade all homeworks and cases for session 0501‚ and grade hw #1‚2‚3 and case #1‚2‚3 for session 0502)
Premium Week-day names Academic dishonesty
Blaine Kitchenware Inc. Looking at the Financial statements of Blaine Kitchenware Inc.‚ in the balance sheet in particular in this case‚ I would say that BKI is a highly over-liquid and under-levered company. In the balance sheet‚ Exhibit 2‚ Cash and Cash equivalents and marketable securities was $66‚557‚000 and $164‚309‚000 respectively. With such high cash balance and marketable securities at hand‚ BKI is not only risking its own growth but also risk turning away investors who may consider
Premium Stock Stock market
Evaluation on Share Repurchase Proposal of Blaine Kitchenware Inc. Group 7 Contents Executive Summary 3 Overview of problems 3 Analysis on Capital Structure & Payout Policies of Blaine 3 1. Inappropriate current capital structure and payout policies 3 2. Advantages and disadvantages of large share repurchase proposal 4 a. Effects of share repurchase on assets‚ liabilities and equity on balance sheet 5 b. Effects of share repurchase on debt ratios and interest coverage ratio 5 c. Effects of
Premium Dividend yield Stock market Stock
.tsoc noitargetni dna nwod- etirw yrotnevni ‚elpmaxe rof ‚tol a IKB tsoc evah sn oi tisiuqca esehT .htworg gniyortsed-eulav ni tsevni lliw yeht dna ‚eerf si latipac taht kniht dluow tnemeganam ehT .noitacollasim latipac f o sksir gib eb lliw ereht ‚hsac sulprus fo tol a sah ynapm oc eht fI – ksiR tnem tsevnieR .sreyub laitnetop cinagro fo daetsni seinapm oc llams f o sn oi tisiuqca m orf semoc htworg tnecer lla ‚IKB roF .stcejorp ot laed retteb a noi tisiuqca eht gnikam ‚n oillim 927 $ ot n oillim
Premium
you believe Blaine’s current capital structure and payout policies are appropriate? Why or why not? According to the current situation‚ we think Blaine’s current capital structure and payout policies are not appropriate. capital structure： Blaine is currently over-liquid and under-levered. In this case‚ Blaine’s shareholders are suffering from the effects. Because Blaine is a public company with large portion of its shares held by conservative family members‚ Blaine has huge financial surplus
Premium Finance
Solution 1: (i) P0 = D1 Ke - g CA – IPC TEST CAPITAL STRUCTURE = 3.50 (1.06) 0.15 – 0.06 = `41.22 (ii) Ke = D1 + g P0 0.15 = 3.50 (1 + g) + g 50 7.50 = 3.50 + 3.50g + 50g g= 4 = 7.48% 53.5 Solution 2: (i) Determination of EPS at EBIT level of `22‚00‚000 Financing Plan (a) (b) Equity Shares (`) Debentures (`) Pref. EBIT 22‚00‚000 22‚00‚000 Less: Interest (16‚000) (1‚21‚000) Taxable Income 21‚84‚000 20‚79‚000 Less: Tax @ 30% (6‚55‚200) (6‚23‚700) EAT 15‚28‚800 14‚55‚300 Less: Dividend on Pref
Premium Stock Leverage Earnings before interest and taxes
Pfizer Inc.’S Cost of Capital and Capital structure - Xiaoyue Shi The costs of capital and capital structures for Pfizer Inc. and its two competitors Merck & Co. Inc. and Johnson & Johnson in the pharmaceutical industry are analyzed in this memo. When calculating the cost of common stock for the three companies‚ three different approaches including Capital Asset Pricing Model (CAPM)‚ Discounted Cash Flow (DCF) and the bond yield plus risk premium are applied (Appendix A). For CAPM approach
Premium Stock market Stock Weighted average cost of capital
Blaine Kitchenware is a company that has occupied the industry for over 80 years and continues to gain control in the market it occupies. As the CEO of the company‚ Mr. Dubinski is dealing with a challenging decision of determining what is best for the family company. He currently feels that the capital structure of the company needs adjustment. He is contemplating the idea of decreasing his equity while increasing his debt in order to increase the value of the company. Dubinski is attempting to
Premium Finance Stock Stock market
Executive Summary: In summary‚ recommendation by the banker to buy back 14 million outstanding shares of Blaine Kitchenware with $ 50 million debt and $209 million cash in hand would result in following financial metric changes: * Increase the value of the firm through the benefit of tax shield from current $960million to $1.063billion. * The offer results in 3% increase in EPS from $0.91 to $0.93 based on 2006 financial numbers. * An increase of 7.3% on ROE from 11% to 18.3% based
Premium Balance sheet Asset Stock
Strategies Group January 2006 Corporate Capital Structure Authors Henri Servaes Professor of Finance London Business School The Theory and Practice of Corporate Capital Structure Peter Tufano Sylvan C. Coleman Professor of Financial Management Harvard Business School Editors James Ballingall Capital Structure and Risk Management Advisory Deutsche Bank +44 20 7547 6738 james.ballingall@db.com Adrian Crockett Head of Capital Structure and Risk Management Advisory‚ Europe & Asia
Premium Taxation Tax Finance