22 Apr Case 30: M&M Pizza What is going on at M&M Pizza? How do the fin
Case 30: M&M Pizza What is going on at M&M Pizza? How do the financial statements for M&M Pizza vary with the proposed repurchase plan? Do the alternative policies improve the expected dividends per share?What impact does the repurchase plan have on M&M’s weighted-average cost of capital? Complete the table below and explain your results.Income StatementDebt = 0Debt = 500Revenue15001500Operating expenses13751375 Operating profit125125Interest payments0Taxes00 Net profit125Dividends125Shares outstanding62.5Dividends per share2Cost of CapitalCost of debt4.00%4.00%Beta0.8Levered BetaCost of equityCAPMWACC= D /V* Kd (1 – t) + (1 – D/V) * Ke What are the debt and equity claims worth under the alternative scenarios, complete the table below and explain your results? You may note that the present value of a perpetual cash flow stream is equal to the expected payment divided by the associated required return. Which proposal is best for investors? What do you recommend that Miller do?Cash flowsDebt = 0Debt = 500Debt holders = Interest paymentsEquity holders = Dividend paymentsFree cash flow = Op profitValueDebt = Int payments / KdEquity = Div payments / KeTotal = Sum or FCF / WACCShare price 1 = Equity / Shares outstandingShare price 2 = DPS / KeValue of Firm = Value of unlevered + Tax shieldD/E = D / (V – D)D/V = D / V How would your analysis in questions 2 and 3 and recommendation in question 4 change if the new tax law is implemented? Please note that, with corporate taxes, the expected debt-to-equity ratio under the share repurchase plan is 0.588, and the number of remaining shares outstanding is 39.4 million. Complete the same table as in question 2 and 3 with a tax rate of 20%.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Wridemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.