Dear Financials, I am urgently need of these maths; PLZ help me.

• Over the next year, Denver Steel Company, expects the following returns on continual investment in the following marketable securities:

Treasury Bills
8.0%
Commercial Papers
8.50%
Money market preferred stock
7.0%

The company’s marginal tax rate for federal income tax purpose is 30% (after allowance for payment of state income taxes) while its marginal incremental tax rate with respect to state income taxes is 7%. On the basis of after tax returns, which is the most attractive investment? Are there other considerations?

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• Bangladesh Automobiles is considering acquisition of XYZ Autos with common stock. Relevant financial information is as follows:

Bangladesh Automobiles
XYZ Autos
Present Earnings (in thousand)
Tk 4000
Tk 1000
Common shares outstanding (in thousands)
2000
800
Earnings per share
2.0
1.25
Price earning ration
12
8

Bangladesh Automobiles plans to offer a premium of 20% over the market price of XYZ stock.

• What is the ratio of exchange of stock? How many new shares will be issued?
• What are the earnings per share for the surviving company immediately following the merger?

If the price/earning ratio of Bangladesh Automobiles stays at 12, what is the market price per share of the surviving company? What would happen if the price /earning ratio went to 11
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Red Chilli Chicken has outstanding warrants where each warrant entitles the holder to purchase two shares of stock at Tk 24 per share. The market price per share of stock and market price per warrant were the following over the last year.

Determine the theoretical value per warrant for each of the observations. Then plot the market value per warrant in relation to this theoretical value. At what price per common share is the warrant premium over theoretical value the greatest? Why?

Attached Files

Over the next year.doc (50.0 KB)