Market Value Of Their Shares - 1770 Words

market value of their shares. Pan-Europa is also in financial distress because during the price wars the company took on a large amount of debt in order to continue paying a dividend to their shareholders. The price wars is not a current issue the company can solve, but rather it is very important they fix the problems they price wars have created. The company’s 1.25 debt-to-equity ratio is causing bankruptcy to be a very possible reality if they cannot increase their earnings to cover their debt. As well as already stated above, because of the price wars, the company is at risk for a hostile takeover. It is very important and urgent that Pan-Europa increases their stock price and lowers their debt-to-equity, to ensure the future of the company. IV. Alternatives and Options For all three alternatives there are the following assumptions: project 6 will be included in the portfolio, either project 7 or project 8 can be chosen, not both—sales and distribution cannot handle it—and all portfolios have a budget of â‚ ¬80. Project 6 is choose because while it has no formal NPV it can be considered an investment of â‚ ¬4 million now to save a cost of â‚ ¬10 million in four years. On the surface, it is clear that â‚ ¬10 million is two and a half times the cost of â‚ ¬4 million, but these costs are at different times. To determine whether or not the company should actually pay the â‚ ¬4 million today, is to find the PV of â‚ ¬10 million dollars. 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