Managerial Finance 476(II)

4. The Beasley Corporation has been experiencing declining earnings, but has just announced a 50 percent salary increase for its top executives. A dissident group of stockholders wants to oust the existing board of directors. There are currently 11 directors and 30,000 shares of stock outstanding. Mr. Wright, the president of the company, has the full support of the existing board. The dissident stockholders control proxies for 10,001 shares. Mr. Wright is worried about losing his job. a. Under cumulative voting procedures, how many directors can the dissident stockholders elect with the proxies they now hold? How many directors could they elect under majority rule with these proxies? ... click for more

Managerial Finance 476(II)

5. Midland Petroleum is holding a stockholders' meeting next month. Ms. Ramsey is the president of the company and has the support of the existing board of directors. All 11 members of the board are up for reelection. Mr. Clark is a dissident stockholder. He controls proxies for 40,001 shares. Ms. Ramsey and her friends on the board control 60,001 shares. Other stockholders, whose loyalties are unknown, will be voting the remaining 19,998 shares. The company uses cumulative voting. a. How many directors can Mr. Clark be sure of electing? b. How many directors can Ms. Ramsey and her friends be sure of electing? c. How many directors could Mr. Clark elect if he obtains all the proxies for... click for more

Managerial Finance 476(II)

8. Rust Pipe Co. was established in 1985. Four years later the company went public. At that time, Robert Rust, the original owner, decided to establish two classes of stock. The first represents Class A founders' stock and is entitled to 10 votes per share. The normally traded common stock, designated as Class B, is entitled to one vote per share. In late 2001, Mr. Steele was considering purchasing shares in Rust Pipe Co. While he knew the existence of founders' shares were not often present in other companies, he decided to buy the shares anyway because of a new technology Rust Pipe had developed to improve the flow of liquids through pipes. Of the 1,200,000 total shares currently outsta... click for more

Managerial Finance 476(II)

11. Todd Winningham IV has $4,000 to invest. He has been looking at Gallagher Tennis Clubs, Inc., common stock. Gallagher has issued a rights offering to its common stockholders. Six rights plus $38 cash will buy one new share. Gallagher's stock is selling for $50 ex-rights. a. How many rights could Todd buy with his $4,000? Alternatively, how many shares of stock could he buy with the same $4,000 at $50 per share? b. If Todd invests his $4,000 in Gallagher rights and the price of Gallagher stock rises to $59 per share ex-rights, what would his dollar profit on the rights be? (First compute profits per right.) c. If Todd invests his $4,000 in Gallagher stock and the price of the stock r... click for more

Worldwide Scientific Equipment is considering a cash acquisition of Medical Labs for 1.5 million.

Worldwide Scientific Equipment is considering a cash acquisition of Medical Labs for 1.5 million. Medical Labs will provide the following pattern of cash inflows and synergistic benefits for the next 25 years. There is no tax loss carry forward. Years 1-5 6-15 16-25 Cash inflows (aftertax) $100,000 $120,000 $160,000 Synergestic benefits (aftertax) 15,000 25,000 45,000 The cost of capital for acquiring firm is 9 %. Should the merger be undertaken? Please see attached for complete details.