Managerial Finance Closing Essay

The corporation announces that it is non plump outing, what do you destine testament happen to the price of the clings? What will happen to the price of the bonds if the telephoner does expand? I believe if the phoner announces that it is non expanding then the prices of the bonds would non change, however if the company decides to expand then the prices of the bonds would increase out-of-pocket to the increase in the value of the company and the return would be greater. 5. If the company opts not to expand, what are the implications for the companies future adoption necessarily? What are the implications if the company does expand?If the company decides not to expand, I do not believe that the implication for the companies future borrowing needs would differ too oft from if they decided to expand. However one revolution is if the company decides to expand they will find oneself more integrity as shown preceding(prenominal) by the calculations. If the company has an increase of legality, they develop the opportunity for an increase of borrowing, if they needed. However, if the company opts not to expand, they can still borrow in the future, however, their equity will remain the same, which would demo them less variation in regards to borrowing. 6.Beca give of the bond covenant, the expansion would have to be financed with equity. How would it impact your answer if the expansion were financed with cash on tip over instead of new equity? From my perspective, I do not cover an issue with the expansion being financed with equity rather than cash on hand. I believe it would be an easier contain to keep track of the finances. I persuasion the primary reason some companies riding habit equity to finance new projects is because they do not have the cash on hand to begin with, and although they have equity, it would be far too much agitate to convert it over to cash. So, they would rather use equity to finance.