KMS Corporation has assets with a market value of $551 million, $40 million of which are cash.
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Question:
KMS Corporation has assets with a market value of $551 million, $40 million of which are cash. It has debt of $273 million, and 11 million shares outstanding. Assume perfect capital markets.
a. What is its current stockprice?
b. If KMS distributes $40 million as adividend, what will its share price be after the dividend ispaid?
c. Ifinstead, KMS distributes $40 million as a sharerepurchase, what will its share price be once the shares arerepurchased?
d. What will its new marketdebt-equity ratio be after eithertransaction?
Related Book For
Organizational Behavior Science The Real World and You
ISBN: 978-1111825867
8th edition
Authors: Debra L. Nelson, James Campbell Quick
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