Faculty Note: If you would like to substitute China with a different country to avoid plagiarism, please do so.
Write a six to eight (6-8) page paper in which you:
- Examine the pros and cons of an IPO for Galaxy International. Recommend whether the company should or should not proceed with an IPO.
- Evaluate the appropriateness of the financing alternatives and strategies that are available to Jeremy, and select the one (1) you believe best suits the company. Provide support for your rationale.
- Determine the advantages of debt over equity, and what each would cost after taxes. Determine Galaxy’s weighted average cost of capital (WACC) if it uses both alternatives to raise capital (i.e., debt and equity).
- Recommend one (1) financial instrument that Jeremy could use in order to ensure a stable supply of oil for his operations and to protect his firm from currency translation losses.
- Suggest one (1) approach that Jeremy can use to hedge his currency translation and transaction exposure to the Yuan. Provide support for your suggestion.
- Determine whether Jeremy should lease or buy the plant in China. Justify your position using information regarding the current economic state in China.
- Imagine that you are a portfolio manager. Determine whether or not you would want to participate in the IPO if Galaxy International goes public. Provide a rationale for your decision. Determine the expected return on the stock using Capital Asset Pricing Model (CAPM).
- Determine if the Galaxy International’s expected returns would exceed its WACC. Provide a rationale.
- Use at least five (5) quality academic resources in this assignment. Note: Wikipedia and other Websites to not qualify as academic resources.
Your assignment must follow these formatting requirements:
- Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
- Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
- Examine the concepts related to financial management and the financial environment.
- Evaluate different types of financing available in the marketplace and the related impact on firm value.
- Examine the various alternatives to managing and mitigating business and financial risk with the use of forwards, futures, swaps, and options.
- Evaluate how simulation and scenario analysis can be used to improve an organization’s forecasting ability, and reach an optimal financing mix through the use of these instruments
- Develop strategies to protect a firm from financial distress.
- Examine the tools and methods used for portfolio analysis.
- Use technology and information resources to research issues in corporate finance.
- Write clearly and concisely about corporate finance using proper writing mechanics.