I dunno

Should UST undertake the $1 jillion re enceinteization? base on USTs rate of return being higher than lay out of capital and the incremental increase of $380 million, they should undertake the $1 billion recapitalization. They exit not have a problem fashioning the stake allowance and volition see an increase in dividends. This is under the assumption UST is able to obtain at least(prenominal) a BBB credit rating or greater. In addition, external issues that may affect or hurt the USTs military posture atomic number 18: Decrease in pattern of products Decrease in market place consider attri moreoverable to competitions brush aside in prices A drop in demand by consumers due to unstable preservation Increase in the legislation regulating the expend of smokeless tobacco Legal judgments against UST that would divert money allocated for interest payment UST has compensable uninterrupted dividends since 1912. Will the recapitalization b alk future dividend payments? Based on short-run analysis the recapitalization bequeath not hamper dividend payments in the near future and will actually come down about to improvements. aft(prenominal) recapitalization UST will safely have sufficient income to backrest the cost of interest payments and still payout regular dividends without a problem. The short-term do of the recapitalization are positive for parcel of landholders.

Results will prove dividend per share will increase from $1.62 to $1.86 with an A rating. Even at a BBB rating, the dividend per share is set to increase to $1.86. Earnings per share will besides go up in either case. long-run effect! of the recapitalization are less clear. Unfortunately, UST does not have a heavy international presence and the tobacco market in the coupled States continues to be plagued by lawsuits, strong regulation and fall volumes. The increase debt will bring increased stockholder risk, but at the same time USTs history of stability is encouraging. The parsimony of halt due to the voting power concentration post-recapitalization privy lead to changes...If you want to get a full essay, tack it on our website: BestEssayCheap.com

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