Submit a written paper which is at 2-3 pages in length, exclusive
Submit a written paper which is at 2-3 pages in length, exclusive of the reference page. The Abstract is not required or needed Papers must be double spaced in Times New Roman font (or its equivalent) which is no greater than 12 points in size. The paper should cite at least three sources independent of the textbooks.In this paper, please discuss the following case study. In doing so, explain your approach to the problem, support your approach with references, and execute your approach. Provide an answer to the case study’s question with a recommendation.Case Study:The Comic Book Publication Group (CBPG) specializes in creating, illustrating, writing, and printing various publications. It is a small but publicly traded corporation. CBPG currently has a capital structure of $12 million in bonds that pay a 5% coupon, $5 million in preferred stock with a par value of $35 per share and an annual dividend of $1.75 per share. The company has common stock with a book value of $6 million. The cost of capital associated with the common stock is 10%. The marginal tax rate for the firm is 33%.The management of the company wishes to acquire additional capital for operations purposes. The chief executive officer (CEO) and chief financial officer (CFO) agree that another public debt offering (corporate bonds) in the amount of $10 million would suffice. They believe that due to favorable interest rates, the company could issue the bonds at par with a 4% coupon. Before the Board of Directors convenes to discuss the debt Initial Public Offering (IPO), the CFO wants to provide some data for the board of directors’ meeting notebooks. One point of the analysis is to evaluate the debt offering’s impact on the company’s cost of capital. To do this: Solve for the current cost of capital of CBPG on a weighted average basis Solve for the new cost of capital, assuming the $10 million bond issued at par with a 4% coupon. Describe how you approached these calculations. Also discuss the tax shield advantage that debt capital provides, and briefly explain the cost of capital and WACC Provide a Table(s) to present answers (Students can transfer their EXCEL Table if utilized)Summarize findingsSuperior papers will explain the following elements when responding to the assignment questions: Provide narrative and solve for the current cost of capital of CBPG on a weighted average basis (WACC) Provide narrative and solve for the new cost of capital (WACC) Provide accurate WACC calculations for both scenarios Provide a Table(s) to present answers (there is a difference between performing calculations and presenting the supporting data and solved answers) Provide narrative on tax shield implications for both scenarios Provide narrative briefly explaining the cost of capital and WACC Provide a clear, logical conclusion
Collepals.com Plagiarism Free Papers
Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS
Why Hire Collepals.com writers to do your paper?
Quality- We are experienced and have access to ample research materials.
We write plagiarism Free Content
Confidential- We never share or sell your personal information to third parties.
Support-Chat with us today! We are always waiting to answer all your questions.
