Cci Harvard Case

Continental Carriers Continental Carriers, Inc.  Advanced Financial Management  Continental Carriers, Inc. (CCI) should take on the long- margin debt to  finance the acquisition of interior(a) Freight, Inc. for a few reasons.  The company is heavy on assets, the debt proportionality  will for only grow to 0.40  with the added $50M in debt. Also, the theater will bring in from an  added $2M in a tax shield and be commensurate to return $12.7M a year to its  stockholders and investors, instead of $8.9M if candor is elevated to  finance the acquisition. Lastly, the stock price and earnings per  shell reveal will plus to $3.87 in comparison to an comeliness-financed  acquisition of $2.72 per sh are. CCI would be taking a somewhat high  risk by issuing superfluous stock due to the uncertainty or so the  offer price. Having a low P/E dimension with respect to the rest of  the market, and the replacement cost of the firm existence greater than  its book value (argument 3), there is a true prognosis that the current  stock price and the proposed offering Although long-term debt is a better financing choice a few of the  drawbacks are pointed out. Debt holders claim profit before paleness  holders, so the chance that profits may be swallow than expected,  increases risk to equity may reduce or shut down stock value.

However,  in extreme financial situations such as a recess period, CCI would  still be able to increase its cash during a recession period with all  debt not bad(p) structure. Also, there is a remaining 12.5 million that  would have to be give at the expiration of the bonds, but that c ould  be paid off by issuing new bonds or ! additional equity at that  time. . Introduction Continental Carriers Inc is a  transport company which focuses in carrying ecumenic commodities. From the start of its operation in 1952, the company manages within the dominion of the Pacific Coast and from lolly to various places in Texas. They achieve few short term loans resulting from a low debt indemnity and evading...If you want to get a full essay, order it on our website: OrderEssay.net

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