to d) and prepare a report (3_4 pages) on your conclusions; Show calculations. Info Systems Technology (IST) manufactures microprocessor chips for use in appliances and other applications. IST has no debt and 100 million shares outstanding. The correct price for these shares is either $14.50 or $12.50 per share. Investors view both possibilities as equally likely, so the shares currently trade for $13.50. IST must raise $500 million to build a new production facility. Because the firm would
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Equity versus borrowing at a rate of $12.50 Info Systems Technology is a manufacturing company which manufactures microprocessor chips for the use of appliances and other applications. Info Systems Technology needs to raise $500 million in order to build a new production facility. Info Systems Technology’s share price is $13.50. We are assuming that IST issues equity, the share price remains constant. We will take two different approaches in deciding if IST should borrow the $500 million or chose equity
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Info Systems Technology (IST) manufactures microprocessor chips for the use in appliances and other applications. IST has no debt and 100 million shares outstanding. The correct price for these shares is either $14.50 or $12.50 per share. Investors view both the possibilities as equally likely, so the shares currently trade for $13.50. IST must raise $500 million to build a new production facility. Because the firm would suffer a large loss of both customers and engineering talent in the event
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Aishah Tatum Assignment 4 Financial Management Dr. Woo June 4, 2011 Info Systems Technology (IST) manufactures microprocessor chips for use in appliances and other applications. IST has no debt and 100 million shares outstanding. The correct price for these shares is either $14.50 or $12.50 per share. Investors view both possibilities as equally likely, so the shares currently trade for $13.50. IST must raise $500 million to build a new production facility. Because the firm would suffer
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08/25/2010 PROBLEM 28 ASYMMETRIC INFORMATION AND CAPITAL STRUCTURE Info Systems Technology (IST) manufactures microprocessor chips for use in appliances and other applications. IST has no debt and 100 million shares outstanding. The correct price for these shares is either $14.50 or $12.50 per share. Investors view both possibilities as equally likely, so the shares currently trade for $13.50. IST must raise $500 million to build a new production facility. Because the firm would
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