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0132994267.pdf 0132994267.pdf HawarInternationalisa shipping firm with a current share price of $5.50 and 10m shares outstanding. Suppose Hawar announces plans to lower its corporate taxes
0132994267.pdf0132994267.pdf
- HawarInternationalisa shipping firm with a current share price of $5.50 and 10m shares outstanding. Suppose Hawar announces plans to lower its corporate taxes by borrowing $20 million and repurchasing shares. a. With perfect capital markets, what will the share price be after this announcement? Suppose that Hawar pays a corporate tax rate of 30%, and that shareholders expect the change in debt to be permanent.
- If the only imperfection is corporate taxes, what will the share price be after this announcement?
- Suppose the only imperfections are corporate taxes and financial distress costs. If the share price rises to $5.75 after this announcement, what is the PV of financial distress costs Hawar will incur as the result of this new debt?
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Cases in Finance
Authors: Jim DeMello
3rd edition
1259330476, 1259330478, 9781259352652 , 978-1259330476
