Answer:
a. Suppose GP issues $ 100$100 million of new stock to buy back the debt. What is the expected return of the stock after this transaction?
b. Suppose instead GP issues $ 50.00$50.00 million of new debt to repurchase stock. i. If the risk of the debt does not change, what is the expected return of the stock after this transaction?
ii. If the risk of the debt increases, would the expected return of the stock be higher or lower than when debt is issued to repurchase stock in part (i)?
- If the risk of the debt increases, then the cost of the debt will increase. Therefore, the company will need to spend more money paying the interests related to the new debt which would decrease the ROE compared to the 18% of (i). Since we do not know the new cost of the debt, we cannot know exactly by how much it will affect the ROE, but I assume it will still be higher than the previous ROE.
Explanation:
common stock $200 million
total debt $100 million
required rate of return 15%
cost of debt 6%
current profits = ($200 million x 15%) + ($100 x 6%) = $30 million + $6 million = $36 million
if equity increases to $300 million, ROI = 36/300 = 12
if instead new debt is issued at 6%:
equity 150 million, debt 150 million
cost of debt = 150 million x 6% = $9 million
remaining profits = $36 - $9 = $27 million
ROI = 27/150 = 18%
Answer:
threat of new entrants
Explanation:
Based on the information provided within the question it can be said that force that has affected Sasha's business, from Porters five forces was the threat of new entrants. This force refers to the threat that comes from new competitors entering an industry with existing competitors. If the barrier to entry of the market is low/easy for these new companies then it creates a huge threat to the existing company's since it allows them to get established in the market fast and at a low cost.
Based on the information given this type of maintenance is called a maintenance release.
A maintenance release is a release which help to make correction on security issues such as threat or vulnerability without modifying or adding new features to the software.
Maintenance release help to fix or repair programming errors that occur during the software life cycle stage or programming error that occur due to mistake during the requirement stage validating process.
Software that are released often undergo a maintenance release so as detect and fix any error or bug that was detected.
Inconclusion this type of maintenance is called a maintenance release.
Learn more about maintenance release here:brainly.com/question/13860230
Answer:
Barter; for trying to coordinate trades
Explanation:
The barter is the system where the goods or services are exchanged with another goods or services. Here no money involvement is there
Only goods or services are exchanged with the different good or services
So it is a complete non-adequate mechanism and it should be tried for coordinating the trades
Therefore the above option should be considered
