Business, 28.01.2020 17:44 baeethtsadia

Schwartz industry is an industrial company with 102.6 million shares outstanding and a market capitalization (equity value) of $ 3.49 billion. it has $2.05 billion of debt outstanding. management have decided to delever the firm by issuing new equity to repay all outstanding debt. a. how many new shares must the firm issue? b. suppose you are a shareholder holding 100 shares, and you disagree with this decision. assuming a perfect capital market, describe what you can do to undo the effect of this decision.

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Answer from: sjeueujs2067

a. How many new shares must the firm issue?

We first find the price per share. We divide the market capitalization value by the number of shares outstanding:

Price per share = $3,490,000,000/102,600,000

= $34.01

Now, we divide the debt outstanding by the price per share

Shares to be issued = $2,050,000,000/34.02

= 60,266,476

Thus, Schwartz industry must issue 60,266,476 new shares to pay all outstanding debt.

b. Suppose you are a shareholder holding 100 shares, and you disagree with this decision. Assuming a perfect capital market, describe what you can do to undo the effect of this decision.

All you can do is to even out your position under the new circumstances. To do so, you must buy a proportional number of newly issued shares.

In this case, at first the total number of shares outstanding is 102,600,000, and you hold 100 of those. That means that you hold the 0.000097% of the shares.

Now, the total number of shares outstanding is 162,866,476, and the 0.000097% of that is 157, thus, to keep your position, you must buy 57 of the newly issued shares.

Answer from: Quest

There are three key entities in thefederal reserve system: the board of governors, the federal reserve banks(reserve banks), and the federal open market committee (fomc). while the federal reserve has frequent communication with executive branch and congressional officials, its decisions are made independently.

Answer from: Quest

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi

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Schwartz industry is an industrial company with 102.6 million shares outstanding and a market capita...