Managerial Finance: Identifying the Value of Vandell's Stock and Share Valuation

This article discusses the current value of Vandell's stock and value per share of Vandell to Hastings Corporation in Managerial Finance. It also depicts the money received by each class of investors. The article includes tables and calculations to explain the concepts. The bibliography lists the sources used in the article.

Running head: MANAGERIAL FINANCE
Managerial Finance
Name of the Student:
Name of the University:
Authors Note:

MANAGERIAL FINANCE
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Table of Contents
22-1. Identifying the current value of Vandell’s stock:.............................................................2
22-2. Identifying the value per share of Vandell to Hastings Corporation:...............................3
24-1. Depicting the money received by each class of investors:...............................................5
Bibliography:..............................................................................................................................7

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22-1. Identifying the current value of Vandell’s stock:
Particulars Value
risk free rate 5%
Beta 1.4
Market premium 6%
Cost of equity 13.400%
Particulars Value
Tax 40%
Cost of equity 13.40%
Debt 8%
WACC 10.82%
Particulars Value
FCFE $ 2,000,000.00
G 5%
WACC 10.82%
Vandella valuation $ 36,082,474.23
Particulars Value
Vandella valuation $ 36,082,474.23
Debt $ 10,820,000.00
Vandella share valuation $ 25,262,474.23

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Particulars Value
Vandella share valuation $ 25,262,474.23
Number of shares $ 1,000,000.00
Share price $ 25.26
22-2. Identifying the value per share of Vandell to Hastings Corporation:
Particulars Value
Cost of equity 0.134
debt 8%
r 11.78%
Particulars Value
Interest $ 1,500,000.00
Tax rate 40%
Tax shield 1 $ 600,000.00
Particulars Value
Interest $ 1,472,000.00
tax rate 40%
Tax shield 4 $ 588,800.00
Particulars Value

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Tax shield 4 $ 588,800.00
g 5%
r 11.78%
Tax shield H value $ 9,118,584.07
Particulars Value
Tax shield 1 $ 600,000.00
Tax shield 4 $ 588,800.00
Tax shield H value $ 9,118,584.07
r 11.78%
Tax shield $ 7,664,493.82
Particulars Value
FCF $ 2,500,000.00
FCF $ 2,900,000.00
FCF $ 3,400,000.00
FCF $ 3,570,000.00
FCF $ 55,290,000.00
r 11.78%
Unlevered V $ 44,693,829.56
Particulars Value

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Unlevered V $ 44,693,829.56
Tax shield $ 7,664,493.82
Valuation $ 52,358,323.38
Particulars Value
Valuation $ 52,358,323.38
Debt $ 10,820,000.00
Number of shares $ 1,000,000.00
Equity value $ 41.54
24-1. Depicting the money received by each class of investors:
Particulars Amount
Sale proceeds $ 2,500,000.00
Fees and expenses of administration of bankruptcy $ 281,250.00
Available balance to creditors $ 2,218,750.00
Claims of Creditors Amount
payable
Amount
paid
Available balance
to creditors
Claim
percentage
Balance $
2,218,750.00
Notes payable $ 750,000.00 $
750,000.00
$
1,468,750.00
100.00%
Accounts payable $ 375,000.00 $ $ 100.00%

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375,000.00 1,093,750.00
Subordinated
debentures
$ 750,000.00 $
750,000.00
$
343,750.00
100.00%
Stockholders $ 1,875,000.00 $
343,750.00
$
-
18.33%

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Bibliography:
Asongu, S.A., 2015. Finance and growth: new evidence from meta-analysis. Managerial
Finance, 41(6), pp.615-639.
Baker, H.K. and Weigand, R., 2015. Corporate dividend policy revisited. Managerial
Finance, 41(2), pp.126-144.
Gitman, L.J., Juchau, R. and Flanagan, J., 2015. Principles of managerial finance. Pearson
Higher Education AU.
Kao, E.H., Hsu, C.H., Lu, Y. and Fung, H.G., 2016. Ranking of finance journals: a stochastic
dominance analysis. Managerial Finance, 42(4), pp.312-323.