James Holliday_Week4Assignment_FI516

James Holliday_Week4Assignment_FI516 - Issue $ 2,400,000.00...

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Problem 20-3 a) 2005 2010 Earnings Per Share $ 8,160.00 $ 12,000.00 Dividends Per Share $ 4,200.00 $ 6,000.00 Book Value Per Share $ 90,000.00 b) gEPS gDPS Kennedy 8.4% 8.4% Strasburg 6.4% 6.4% Edelman 8.0% 7.4% c) d) e) 2005 2010 Earning s Per Share $ 2.04 $ 3.00 Dividen ds Per Share $ 1.05 $ 1.50 Book Value Per Share $ 22.50 f) ROE
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a) 2005 2010 Kenned y 15.00% Strasbur g 13.64% Edelma n 13.30% Payout Ratio g) 2005 2010 Kenned y 50.00% 50.00% Strasbur g 50.00% 50.00% Edelma n 51.47% 50.00% h) Debt to Asset Ratio Kenned y 42.86% Strasbur g 36.59% Edelma n 55.00% i) P/E Ratio Kenned y 8.00 Strasbur g 8.67 j) EPS Multipl e DPS Multipl e Book Value Multipl e Kenned y 8.00 16.00 1.20 Strasbur g 8.67 17.33 1.18 Kenned y Strasbur g Earning s $ 24.00 $ 26.00
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a) 2005 2010 Dividen ds $ 24.00 $ 26.00 Book Value $ 27.00 $ 26.55 k) Kenned y 15.18% Strasbur g 12.54% Edelma n based on Kenned y $ 21.54 Edelma n based on Strasbur g $ 33.66 l) Problem 20-4 a) Total Dollar Call Premium $ 4,400,000.00 Yes It is Tax Deductible After Tax Cost $ 2,640,000.00 b)
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a) Dollar Flotation Cost of New Issue $ 1,600,000.00 c) Flotation Cost, Old
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Unformatted text preview: Issue $ 2,400,000.00 Already Expensed $ 480,000.00 Unexpensed $ 1,920,000.00 Tax Savings $ 768,000.00 d) Net After-Tax Cash Outlay $ 3,472,000.00 e) Semi-Annual Tax Savings $ 16,000.00 Forgone Semi-Annual Tax Savings $ 19,200.00 f) Semi-Annual After-Tax Interest Savings Old Issue $ 1,320,000.00 New Issue $ 960,000.00 After-tax Interest Savings If Refunded $ 360,000.00 a) g) Semiannual Flotation Cost Tax Effects: Semiannual tax savings on new flotation $ 16,000.00 Tax benefits lost on old flotation $ 19,200.00 Net amortization tax effects $ (3,200.00) Semiannual Interest Savings Due To Refunding: Semiannual interest on old bond $ 1,320,000.00 Semiannual interest on new bond $ 960,000.00 Net interest savings $ 360,000.00 Semiannual cash flow $ 356,800.00 Discount Rate for FCF 2.4% Present Value $9,109,413.35 h) NPV Refunding $5,637,413.35 a)...
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James Holliday_Week4Assignment_FI516 - Issue $ 2,400,000.00...

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