Structure

Case Solution for Pricing Strips and the Term Structure

Complete Case details are given below :

Case Name :      Pricing Strips and the Term Structure
Authors :           Robert S. Harris
Source :             Darden School of Business
Case ID :           UV2257
Discipline :        Finance
Case Length :    05 pages
Solution Sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
This case provides data on coupon bonds. Students are asked to estimate the value of portions of the bond (stripping coupons and principal) and must deal with the fact that the term structure of interest rates is not flat. There is also a description of the general nature of stripping bonds.
 
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Case Solution for MCI Communications Corp.: Capital Structure Theory (A)

Complete Case details are given below :

Case Name :      MCI Communications Corp.: Capital Structure Theory (A)
Authors :           Susan Chaplinsky, Robert S. Harris
Source :             Darden School of Business
Case ID :           UV2421
Discipline :        Finance
Case Length :    11 pages
Solution Sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
This case provides an introductory exercise for estimating the cost of capital (cost of equity, weighted average cost of capital) for a firm contemplating a large increase in debt. Students are asked to compare the debt policy of MCI Communications with that of five other leading telecommunications companies to find MCI’s optimal capital structure.
 
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Case Solution for The Wm. Wrigley Jr. Company: Capital Structure, Valuation, and Cost of Capital

Complete Case details are given below :

Case Name :      The Wm. Wrigley Jr. Company: Capital Structure, Valuation, and Cost of Capital
Authors :           Robert F. Bruner, Sean Carr
Source :             Darden School of Business
Case ID :           UV1373
Discipline :        Finance
Case Length :    11 pages
Solution Sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
In June 2002, a managing director of an “active investor” hedge fund is considering the possible gains from increasing the debt capitalization of The Wm. Wrigley Jr. Company. Wrigley has been conservatively financed, and at the date of the case, carries no debt. The tasks for the student are to: ? Estimate the potential change in value from re-levering Wrigley using adjusted present value analysis; ? Assess the impact on weighted average cost of capital, earnings per share, the credit rating of the firm, and voting control of the Wrigley family; ? Consider the merits of dividend or share repurchase as a means of returning cash to shareholders. The central teaching objective of the case is to explore the financial effects of capital structure change. Key here is the trade-off between the tax benefits of debt and the associated costs in the form of financial distress and loss of flexibility. Related issues include signaling to investors, clientele effects (control considerations for the Wrigley family), and incentives created for directors and managers. Finally, the case affords a comparison of dividends and share repurchases.
 
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Case Solution for Hutchison Whampoa Ltd.: The Capital Structure Decision

Complete Case details are given below :
Case Name :      Hutchison Whampoa Ltd.: The Capital Structure Decision
Authors :           Andrew Karolyi, Larry Wynant, Geoff Crum, Peter Yuan
Source :             Ivey Publishing
Case ID :            99N021
Discipline :        Finance
Case Length :    26 pages
Solution Sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
Hutchison Whampoa was considering strategies for its long-term capital structure. The HK$35 billion Hong Kong-based conglomerate had ambitious growth plans in multiple business sectors in different geographies. Traditionally, like many of its domestic peers, Hutchison had relied entirely on short- to medium-term bank loans. Its demand for long-term financing, attractive rates in other capital markets (especially the United States), and concern about a more diversified investor base had led Hutchison to explore other financing options. In particular, the company was debating the benefits of a Yankee Bond Offering. At the time, Hutchison had already approached Moody’s and Standard & Poor’s for a bond rating.
 
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Case Solution for Blaine Kitchenware, Inc.: Capital Structure (Brief Case)

Complete Case details are given below :
Case Name :      Blaine Kitchenware, Inc.: Capital Structure (Brief Case)
Authors :           Joel L. Heilprin, Timothy A. Luehrman
Source :             HBS Brief Cases
Case ID :            4040
Discipline :        Finance
Case Length :    09 pages
Solution sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
A diversified mid-sized manufacturer of kitchen tools contemplates a stock repurchase in response to an unsolicited takeover. The company must determine the optimal debt capacity and capital structure, and subsequently estimate the resulting change in firm value and stock price. Attention is also given to the value of interest tax shields.
 
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