Cci Harvard Case

Continental Carriers Continental Carriers, Inc.  Advanced Financial Management  Continental Carriers, Inc. (CCI) should take on the long- enclosure debt to  finance the acquisition of interior(a) Freight, Inc. for a few reasons.  The company is heavy on assets, the debt proportionality  quit for only grow to 0.40  with the added $50M in debt. Also, the hard will advance from an  added $2M in a tax shield and be suitable to return $12.7M a year to its  stockholders and investors, instead of $8.9M if candor is embossed to  finance the acquisition. Lastly, the stock price and earnings per  shell emerge will enlarge 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 surplus stock due to the uncertainty or so the  crack 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 justness  holders, so the chance that profits may be pass up than expected,  increases risk to equity may reduce or close 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 hood structure. Also, there is a remaining 12.5 million that  would have to be paying(a) at the expiration of the bonds, but that could  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 dinero 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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