Financial instrument that jeremy could use

Financial instrument that jeremy could use

Galaxy International is a small privately held company in the Northeast U.S. which manufactures high- tech carbon composite skis for the U.S. market. The company has been in business for 20 years, has 125 employees, and has $50 million in annual sales. Its owner, Jeremy Riven, is an ex-Olympic skier who developed the proprietary technology and bonding polymers that give Galaxy skis their unique flexibility, durability, and propensity to need low maintenance-all of which serious skiers in the U.S. have come to prize. Major costs involved in the manufacturing of skis are oil polymers, carbon fiber, and labor. Ski technicians are highly skilled machinists, and manufacturing the finished product is as much an art form as it is a science.

Jeremy has recently considered an initial public offering (IPO) to allow the firm to raise the funds it needs to go international. The underwriting group from Morgan Stanley believes they could easily raise sixty (60) million in the equity markets, and fifty (50) million in the bond market. Jeremy is trying to determine the cost of debt, the cost of equity (four [4] million shares at $15/share), and the firm’s weighted average cost of capital if he goes public and issues corporate bonds with a coupon rate of 8%. Last year, the firm resided in a 28% tax bracket. The risk-free rate in the U.S. is 2%, and the expected return on the market is 14%. Morgan Stanley estimates Galaxy’s beta, if traded publicly, would be approximately 1.8%. Galaxy has been growing at 15% a year since its inception.

Jeremy would like to expand his current U.S. facility from 40,000 square feet to 100,000 square feet, automate certain processes which heretofore have been done manually, and outsource work to China, where he plans to either build or lease a plant to extend his ski line worldwide. He could build a 50,000- square-foot facility in Canton for fifty (50) million dollars, or lease a similar facility for ten (10) million a year. Annual operating costs would be twenty (20) million dollars, and projected free cash flow, based on past experience, would be twelve (12) million a year (whether he leases or buys). The life of the plant would be fifteen (15) years, and inflation in China is currently running at 6% annually. Galaxy would repatriate profits from the Chinese operation and consolidate them with those of the U.S. operations. All expenses of operating the plant in China would be in Yuan.

Use the Internet to locate information about current events in China related to its economic state.

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.

Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees


We value our customers, and so ensure that our papers are 100 percent original. Our Team of professionals does not miss the mark; they ensure that step by step each paper is written uniquely. We never duplicate or work as we compare papers rest assured. We deliver our work a day before time to ensure that you don’t miss your deadlines. It is not only doing the work but delivering it at the right time. We capture the consequences of late remittances. .

Money-back guarantee

We value customer satisfaction here at popularessaywriters.com and make sure that you get the best value for your Money. It happens that sometimes you can pay twice for your order or may want to cancel it, or you feel that it doesn’t meet your requirements; our money back guarantee will give you the opportunity to get back your money. We will also refund 100% of money paid double. In case your paper does not satisfy your requirements , we request that you notify us via writing within 2 days otherwise on the third day we will assume that you have been satisfied. Do all your correspondences through our email address popularessaywriters@gmail.com.

Read more

Zero-plagiarism guarantee

At popularessaywriters.com, our professional writers know the consequence plagiarism does for our clients. We have updated software’s such as article checker and copyscape to check for originality of the custom papers before submission of the final paper to the you. Our guarantee to the customer is that we will write 100% original papers for them that are quality, timely and of low cost. We have experienced professional and competent PhD writers who will write quality custom papers for you..

Read more

Free-revision policy

. At popularessaywriters.com, we are proud to provide top-quality Essay writing service to our esteemed customers. We are ready to take up that challenging academic assignment that is giving you sleepless nights and simplify it for you according to your desired requirements. We are willing to revise your paper if it does not meet your requirements. At popularessaywriters.com, we do not compromise with quality; thus, we offer unlimited free revisions until the customer is satisfied with their custom paper. Our unlimited free revision services are provided under the following terms:.. .

Read more

Privacy policy

Popularessawriters.com knows that client’s information is an essential tool for our company. It means that whatever the client requests from our service is kept strictly confidential. It means that whoever writes for this company understands the terms and conditions hence you should not be worried because you will never see your work somewhere else...

Read more

Fair-cooperation guarantee

Rest assured that we will always be attentive to your needs and requirements. We belief in the phrase treat your neighbour as you would want them to treat you. We leave nothing to chance and always look forward to a good interaction with each other.. .

Read more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency