One dealer offers a one-year forward price of 15 per piece, Ask an Expert

Management Studies

One company produces one kind of product.In one year, if the economic situation is good, the price of one piece will be $20. if the economic situation is bad, the price of one piece wil be $10.the company needs no more investment to produce 3.75million pieces.And if it invests additional $150million, it can produce 15 million additional pieces.One dealer offers a one-year forward price of $15 per piece to buy all the products in one year.Assume that the risk free interest rate is 5% and the income tax rate is 20%. find out the company's value after tax.

The company has no debt now and has 1 million outstanding shares.Now it wants to issue $40 million riskless debts to repurchase shares with the value of $40 million. How many shares can it repurchase?

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M997526

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