You have run a series of regressions of firm value changes


You have run a series of regressions of firm value changes at Motorola, the semiconductor company, against changes in a number of macroeconomic variables. The results are summarized here:

Change in Firm Value = 0.05 - 3.87 (Change in Long-Term Interest Rate) Change in Firm Value = 0.02 + 5.76 (Change in Real GNP)

Change in Firm Value = 0.04 - 2.59 (Inflation Rate) Change in Firm Value = 0.05 - 3.40 ($/DM)

a. Based on these regressions, how would you design Motorola's financing?

b. Motorola, like all semiconductor companies, is sensitive to the health of high- technology companies. Is there any special feature you can add to the debt to reflect this dependence?

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Accounting Basics: You have run a series of regressions of firm value changes
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