Assignment for Case Debt Policy at UST Inc. - Edubirdie

University:
Massachusetts Institute of Technology
Course:
15.501/516 | Accounting
Academic year:

2023
Views:

372

Pages:

1
Author:

Noel Park

Corporate Finance Assignment 3: Debt Policy at UST Inc. Prepare a memo addressing the following questions: 1. Suppose that you are considering purchasing UST’s bonds. Briefly describe the attributes and business risks associated with UST that you would find of interest. 2. UST Inc. has a long history of conservative debt policy. Briefly describe why they are considering a recapitalization that involves issuing debt and repurchasing equity? 3. Should UST Inc. undertake the $1 Billion recapitalization? Calculate the effect on stock price assuming that the entire recapitalization is done immediately (January 1, 1999). a. In this calculation, assume the following: i. Corporate tax rate is 38% ii. All equity is bought back at a price that reflects the added value of the tax shield. b. Prepare a Pro Forma Statement to analyze whether UST will be able to make the interest payments. i. Use Exhibit 8 to determine UST’s credit rating and interest rate. ii. State your assumptions clearly.

Related Documents

Assignment for Case Debt Policy at UST Inc.

Assignment for Case Debt Policy at UST Inc. - Page 1

of 1

Recommended Documents

The Balance Sheet and the Recording of Transactions

The Balance Sheet and the Recording of Transactions

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

The Accounting Process

The Accounting Process

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Introduction to Financial and Managerial Accountin Problem Set 2 - Answers

Introduction to Financial and Managerial Accountin Problem Set 2 - Answers

Massachusetts Institute of Technology 15.501/516 | Accounting

Answer Key

Financial Statements - the Annual Report

Financial Statements - the Annual Report

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

The Classified Balance Sheet

The Classified Balance Sheet

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Tabular analysis of the effects of various

Tabular analysis of the effects of various

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Mapping the Telecom Value Chain - A Roadmap for Communications Networks

Mapping the Telecom Value Chain - A Roadmap for Communications Networks

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Constructive Conflict, Uncertainty and Real Options

Constructive Conflict, Uncertainty and Real Options

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Strategic Management and Consulting Proseminar Strategic Questions Lufthansa

Strategic Management and Consulting Proseminar Strategic Questions Lufthansa

Massachusetts Institute of Technology 15.501/516 | Accounting

Answer Key

Advanced Corporate Risk Management MW Petroleum (B) Case Assignment

Advanced Corporate Risk Management MW Petroleum (B) Case Assignment

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Communication for Managers Active Listening Exercise

Communication for Managers Active Listening Exercise

Massachusetts Institute of Technology 15.501/516 | Accounting

Answer Key

Communication for Managers Craigstone Corporation Worksheet

Communication for Managers Craigstone Corporation Worksheet

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

New Documents from this Course

Introduction to Financial and Managerial Accountin Problem Set 1

Introduction to Financial and Managerial Accountin Problem Set 1

Massachusetts Institute of Technology 15.501/516 | Accounting

Answer Key

Midterm 2 Review Notes

Midterm 2 Review Notes

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Marketable Securities (Deferred Taxes)

Marketable Securities (Deferred Taxes)

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note

Long-term Assets, Depreciation (Deferred Taxes)

Long-term Assets, Depreciation (Deferred Taxes)

Massachusetts Institute of Technology 15.501/516 | Accounting

Lecture Note