Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. you working as a finance manager in ali baba inc.

You working as a finance manager in Ali Baba Inc. Let assume Ali Baba Inc...

80.2K

Verified Solution

Question

Accounting

You working as a finance manager in Ali Baba Inc. Let assume Ali Baba Inc has unexpected generated a one- time extra $8 million in cash-flow this year. After announcing the extra cash flow, Ali Baba stock price was $35 and 12 million shares outstanding. As the finance manager, you decide to analyse the possibility of the firm to spend the $8 million excess cash on a potential project that would generate a single cash-flow of $9 million in one year, or use the extra cash to repurchase shares. The cost of capital for Ali Baba Inc is 8%.

i)

Sekiranya Ali Baba Inc memutuskan untuk melabur pada projek tersebut, apa yang akan terjadi pada harga sesaham?

If Ali Baba Inc decide to invest on the project, what will happen to the price per share?

(6 Markah/Marks)

ii)

Sekiranya syarikat memutuskan untuk membeli semula saham mereka, apa yang akan berlaku dengan harga sesaham?

If the firm decide to repurchase their shares, what will happen to the price per share?

(3 Markah/Marks)

iii)

Sebagai pengurus kewangan, strategi mana yang akan anda cadangkan? Justifikasikan jawapan anda.

As a finance manager, which strategy would you recommend? Justify your

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students