Bond Refunding - Strayer Education, Inc.

Bond Refunding - Strayer Education, Inc.

As Brigham and Ehrhardt discuss in Financial Management, refunding bonds involves two decisions. The first base focuses on profitability, is it profitable to call an outstanding restoration in the current period and replace it with a new issue? The second decision looks at timeliness of the refunding related to the firms value, would the firms anticipate value be increased even more if the refunding was postponed to a later date? ((Brigham, E. & antiophthalmic factor; Ehrhardt, M., p. 766). Throughout the typography, there is a review of Strayer Educations capital twist and debt philosophy, advantages and disadvantages of debt to a firms physical process and a hypothetical bond refunding situation. Recommendations, based on the questions be above, are made.

Strayer Educations capital structure is a combination of favourite(a) and common stock. In 2002, their structure was 0% debt, 61% pet stock and 39% common stock. They have no absolutely or long term debt (http://www.strayereducation.com/EdgarDetail.cfm?Company ID=STRA&CIK=1013934&FID=950136-03-1894&SID=03-00 ). As Robert S. Silberman, CEO, says in Strayers annual report, our capital structure remains sound, and we continue to generate more free silver flow than we use(http://www.strayereducation.com/annual.cfm, p. 6).



Strayer has no outstanding bonds and if they did they would probably choose to pay off the debt, but for the purpose of this paper refunding options will be reviewed.

Although Strayer has no short or long term debt, there are several advantages of debt, which overwhelm tax deductible interest payments, financial obligations are condition and of a fixed nature, in an inflationary economy debt top executive be paid back with cheaper dollars, and the use of debt may humble the cost of capital to the firm (Block, S. & Hirt, G., p. 470). Strayer may need to review these benefits and utilize debt when appropriate.

Certainly, debt has several disadvantages as well. For...

If you demand to get a full essay, order it on our website: Orderessay



If you want to get a full essay, wisit our page: write my essay .