You are working for an all equity firm. Your firm's current cost of equity is 8.7 percent and the tax rate is 25 per The firm has 450,000 shares of stock outstanding with a market price of $73.20 a share. The firm is considering restructuring that allows $7.8 million of debt with a coupon rate of 4.5 percent. The debt will be sold at par val the proceeds will be used to repurchase shares. What is the value per share after the recapitalization? (Hint: Yo to determine the total value of equity after recapitalization that accounts for the PV of interest tax shield and th number of shares outstanding after repurchase) $77.71 ⚫ $78.88 $80.05 $81.22 $82.39
You are working for an all equity firm. Your firm's current cost of equity is 8.7 percent and the tax rate is 25 per The firm has 450,000 shares of stock outstanding with a market price of $73.20 a share. The firm is considering restructuring that allows $7.8 million of debt with a coupon rate of 4.5 percent. The debt will be sold at par val the proceeds will be used to repurchase shares. What is the value per share after the recapitalization? (Hint: Yo to determine the total value of equity after recapitalization that accounts for the PV of interest tax shield and th number of shares outstanding after repurchase) $77.71 ⚫ $78.88 $80.05 $81.22 $82.39
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter26: Mergers And Corporate Control
Section: Chapter Questions
Problem 1P: Hasting Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares...
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