10, Recapitalization Firms use recapitalization for different reasons. Recapitalizatlon is the process through which firms make desired changes in their capikal structure by using debt to repurchase equity. Firms may decide to recapitalize for varlous reasons, such as to maintain an optimal cepital structure, to use as a defense mechanism against a hostile takeover, to minimize taxes, or to use in an exit strategy for venture capitalists. As an analyst, you are tracking the financial performance of Northern Inc. The compacy has been 100% equity owned but recently made changes to its capital structure. You have collected the following information about the recopitalization: - Northern issued $21,000,000 in new debt to buy back stock. - The firm had no short-term investments before or after the recapitalization. - Northern had 1,500,000 thares outstanding before the recapitalization. - Northern's coplaal structure now has 35% debt. - The company's operations are valued at $60 million after recapitalization. Based on the information avaltable, solve for the values in the foltowing toble. Click on the dropdown menus and then seiect the best answer Asume that you are in a Modigilan and MMlier (MSM) worid with no taxes. Based on your analysis, you prepared a report with several inferences. While proofreading, you come across the following inference. Consider this case: Consider this case: If Northem Inc, decides to deleverage in the future, the total number of shares outstanding will keep decreasing until creditors own 100% of the company. Is the statement true or false? True False