Managerial Finance

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Mckenzie Corporation's Capital Budget. If the company announces that it is not expanding, what do you think will happen to the price of its bonds?

  • Managerial Finance -

    Unless there is a risk of bond default as a result of expansion, there should be no effect on bond price since it is only determined by the interest rate and term of the bond, and its rating.

    If the company were borrowing by taking on additional debt, its bond rating could fall and the price would fall.

  • Managerial Finance -

    Dear sherill,

    In term of McKenzie case study from the corporate fiance by Ross . Do you have the answers to the remaning questions ?

  • Managerial Finance -

    If the company opts ( choose) not to expand, what is the implication for the company's future borrowing needs? What are the implications if company does expand?

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