In June 2002, is a managing director of an “active investor” hedge funds taking into account the possible gains from the increase in debt capitalization of the Wrigley Company. Wrigley was conservatively financed and, by the time the case is not to blame. The tasks for the student are:? Estimate the potential change in value of re-using Wrigley levers adjusted present value analysis;? Assessment of the impact on the weighted average cost of capital, earnings per share, the credit rating … Read more »

In June 2002, is a managing director of an “active investor” hedge funds taking into account the possible gains from the increase in debt capitalization of the Wrigley Company. Wrigley was conservatively financed and, by the time the case is not to blame. The tasks for the student are:? Estimate the potential change in value of re-using Wrigley levers adjusted present value analysis;? Assessment of the impact on the weighted average cost of capital, earnings per share, the company’s rating, and voting control of the Wrigley family;? Consider the benefits of dividends or share repurchases as a means of returning cash to shareholders. The central aim of teaching the case, explore the financial impact of capital structure change. Key here is the trade-off between the tax benefits of debt and the associated costs in the form of financial hardship and loss of flexibility. Related topics include signaling to investors, customers Effects (control considerations for the Wrigley family), and created incentives for directors and managers. Finally, the case provides a comparison of dividends and share repurchases.
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from
Robert F. Bruner,
Sean Carr
Source: Darden School of Business
11 pages.
Publication Date: Nov 15,, 2005. Prod #: UV1373-PDF-ENG
The Wm Wrigley Jr. Company: Capital Structure, Valuation and Cost of Capital HBR case solution

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