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Chapter 5: Q2DQ (page 471)

In which foreign industry has privatization been most important?

Short Answer

Expert verified

Telecommunication.

Step by step solution

01

Privatization

The term privatization refers to the transfer of government or public-owned entities into the hands of private authorities for managing their operations.

02

Industry that requires privatization 

Telecommunication is that foreign industry where privatization is considered most important because this industry includes critical and sensitive information.

In addition, private sectors run business operations with utmost discipline and provide efficientoutcomes.

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Most popular questions from this chapter

The Presley Corporation is about to go public. It currently has after-tax earnings of \(7,200,000, and 2,100,000 shares are owned by the present stockholders (the Presley family). The new public issue will represent 800,000 new shares. The new shares will be priced to the public at \)25 per share, with a 5 percent spread on the offering price. There will also be $260,000 in out-of-pocket costs to the corporation.

e. Determine what rate of return must be earned on the proceeds to the corporation so there will be a 5 percent increase in earnings per share during the year of going public.

Tyson Iron Works is about to go public. It currently has after-tax earnings of \(4,400,000, and 4,200,000 shares are owned by the present stockholders. The new public issue will represent 500,000 new shares. The new shares will be priced to the public at \)25 per share with a 3 percent spread on the offering price. There will also be $280,000 in out-of-pocket costs to the corporation.

a. Compute the net proceeds to Tyson Iron Works.

What are the disadvantages to being public?

How would you define efficient security markets?

Do corporations rely more on external or internal funds as sources of financing?
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