Your Perfect Assignment is Just a Click Away

We Write Custom Academic Papers

100% Original, Plagiarism Free, Customized to your instructions!

glass
pen
clip
papers
heaphones

FIN571 University of Phoenix Company Market Value Balance Sheet Assignment

FIN571 University of Phoenix Company Market Value Balance Sheet Assignment

**THIS IS A GROUP PROJECT**
I AM ONLY RESPONSIBLE FOR THE QUESTIONS I PROVIDED AT THE BULLET POINTS. MY PORTION DOES NOT NEED TO BE 1,050 WORDS, THE TOTAL ASSIGNMENT IS 1,050.
IF YOU HAVE ADDITIONAL QUESTIONS, PLEASE FEEL FREE TO REACH OUT.

The purpose of this assignment is to demonstrate to students how the issuance of debt to purchase outstanding common stock could affect the value of the company’s equity and redefine the capital structure. The problem will also allow students to explore the effect of corporate taxes through debt financing.
Assignment Steps
Resources: Corporate Finance
Scenario: Hightower, Inc. plans to announce it will issue $2.0 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a coupon rate of 5%. Hightower, Inc. is currently an all-equity company worth $7.5 million with 400,000 shares of common stock outstanding. After the sale of the bonds, the company will maintain the new capital structure indefinitely. The company currently generates annual pretax earnings of $1.5 million. This level of earnings is expected to remain constant in perpetuity. The tax rate is 35%.
Prepare a 1,050-word memo advising the management of Hightower, Inc. on the financial impact, including the following:

What is the expected return on the company’s equity before the announcement of the debt issue?
Construct the company’s market value balance sheet before the announcement of the debt issue. What is the price per share of the firm’s equity?

Show all calculations and submit with your memo.
Format your paper consistent with APA guidelines.
Submit your assignment.

Order Solution Now

Our Service Charter

1. Professional & Expert Writers: Homework Discussion only hires the best. Our writers are specially selected and recruited, after which they undergo further training to perfect their skills for specialization purposes. Moreover, our writers are holders of masters and Ph.D. degrees. They have impressive academic records, besides being native English speakers.

2. Top Quality Papers: Our customers are always guaranteed of papers that exceed their expectations. All our writers have +5 years of experience. This implies that all papers are written by individuals who are experts in their fields. In addition, the quality team reviews all the papers before sending them to the customers.

3. Plagiarism-Free Papers: All papers provided by Homework Discussion are written from scratch. Appropriate referencing and citation of key information are followed. Plagiarism checkers are used by the Quality assurance team and our editors just to double-check that there are no instances of plagiarism.

4. Timely Delivery: Time wasted is equivalent to a failed dedication and commitment. Homework Discussion is known for timely delivery of any pending customer orders. Customers are well informed of the progress of their papers to ensure they keep track of what the writer is providing before the final draft is sent for grading.

5. Affordable Prices: Our prices are fairly structured to fit in all groups. Any customer willing to place their assignments with us can do so at very affordable prices. In addition, our customers enjoy regular discounts and bonuses.

6. 24/7 Customer Support: At Homework Discussion, we have put in place a team of experts who answer to all customer inquiries promptly. The best part is the ever-availability of the team. Customers can make inquiries anytime.