(15–5)

Stock Price after Recapitalization Lee Manufacturing’s value of operations is equal to $900 million after a recapitalization

(the firm had no debt before the recap). Lee raised $300 million in new debt and used this to buy back stock. Lee had no short-term investments before or after the recap. After the recap, wd = 1/3. The firm had 30 million shares before the recap.

What is P (the stock price after the recap)?