Does the book value of the debt coincide with market value
Does the book value of the debt all the time coincide with its market value?
Expert
No. Some illustrations include: long-term debt along with a fixed interest rate which is higher or lower than the present market rate; debt to a company with certain serious financial troubles and debt along with government subsidies.
XYZ Company has debt/assets ratio 50%, that is too high and it must be at 45% to be optimal. This debt reduction must also reduce the bankruptcy costs by $30 million. At present, XYZ has 5 million shares of common stock selling at $50 each. The tax rate of XYZ is 30%.
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Do expected equity flows coincide along with expected dividends?
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Does financial leverage (i.e. debt) have any influence on the Free Cash Flow, upon the Cash Flow to Shareholders, upon the growth of the company and upon the value of the shares?
Flow variables: Any variable, whose magnitude is evaluated over a time period, is termed as glow variable.
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