Home » Case Study: Capital Structure | StudyDaddy.com

# Case Study: Capital Structure | StudyDaddy.com

Part 1: Case Background

MarCher Industries is considering undertaking a new project with a one-year life with the following expected return scenarios.

Cash flow (boom)\$1,500,000\$1,000,000Cash flow (bust)\$400,000\$500,000

The company currently has no debt, but is considering borrowing \$870,000 on a short-term basis to help finance its purchase of the project. The company will owe \$900,000, including principal and interest, in one year. There is 60% chance a boom will occur, and only 40% chance a bust will occur.

Part 2: Case Analysis

1)  Calculate the expected value of the high- and low-risk projects to MarCher Industry’s stockholders if the company remains unlevered. Which project would the stockholders prefer?

2)  Calculate the expected value of the high- and low-risk projects to MarCher’s stockholders and bondholders, assuming the company does borrow money to partially finance the purchase of the project. Which project would the bondholders prefer? Which project would the stockholders prefer?

3)  Explain why a conflict exists between the bondholders and the stockholders.

Show more

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
• 24/7 support
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
• Expert Proofreading
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

### Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

### Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Order your essay today and save 10% with the coupon code: best10