test

Summary of Class on Tuesday

Final will consist of 6 of the old problems and 2 of the new problems and 4 multiple-choice questions.

Capital Budgeting Problem
Bond Refinancing Problem
Bankruptcy – Chapter 7
Valuation Problem
Aditional Funds Needed
Weighted Average
Multiple Choice could consists of questions like: Do Bond Holders vote at stockholder meetings …. NO

What happens if you are a Preferred Stock Holder and the company misses a dividend payment? Your dividend will accumulate without interest. These area called arrearages - you must be paid at some time, but this does not accrue interest. If a dividend has been missed, a preferred stockholder might get to vote … If one dividend payment has been missed, then they might get to vote for one director on the board. If two dividend payments are missed, then they might get to vote for a second director on the board. What are the reasons to go public? Allows owner to diversify his holdings Allows liquidly Helps establish value of firm Easier to raise new equity capital Which costs more – Debt or Equity - EQUITY costs more than debt!