The exercise price on one of ORNE Corporation’s put options is $30 and the price

| June 4, 2016

Question
Please see 3 questions in attached excel file

The exercise price on one of ORNE Corporation’s put options is $30 and the price of the underlying stock is $25. The option will expire in 25 days. The option is currently selling for $5.50. (a,b,c,d,e)

The Marchal Company is evaluating the proposed acquisition of a new machine. The machine’s base price is $250,000, and it would cost another $15,000 to modify it for special use. The machine falls into the MACRS 3-year class, and it would be sold after 2 years for $75,000. The machine would require an increase in net working capital of $5,000. The machine would have no effect on revenues, but it is expected to save the firm $100,000 per year for 2 years in before-tax operating costs. Campbell’s marginal tax rate is 30 percent and its cost of capital is 10 percent. (a,b,c,d)

An investment banker enters into a best efforts arrangement to try and sell 8 million shares of stock at $20 per share for Kemp Corporation. The investment banker incurs expenses of $2.5 million in floating the issue while the company incurs expenses of $1 million. The investment banker will receive 7 percent of the proceeds of the offering. (a,b,c,d,e)

Order your essay today and save 30% with the discount code: ESSAYHELPOrder Now