Suppose Nile Expects $4

question 23

Essay

Suppose Nile expects $4.52 in EPS next year if it does not go through with the investment and associated financing.As a shareholder,to satisfy its funding needs for the investment opportunity,do you prefer the company issues $100 million in new debt at an interest rate of 7%,or issues 2 million shares of equity at a target price of $50?
Show supporting calculations,and provide arguments and potential counter-arguments for your recommendation.

---

Definitions:

Bargaining Impasse

A situation where the parties involved in negotiations are unable to reach an agreement, leading to a deadlock.

Lockout

An action taken by employers to prevent workers from entering the workplace during a labor dispute, essentially reversing a strike.

Management Rights

The legal and contractual rights that allow employers to manage, direct, and control their operations and workforce.

Withholding Labor

A tactic used by workers, such as in a strike, where they refuse to work in order to pressure employers to meet their demands.