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2. MalikCo is currently an all-equity firm with expected EBIT of Rs. 240,000 in perpetuity. The firm's current WACC is 15% and can borrow at
2. MalikCo is currently an all-equity firm with expected EBIT of Rs. 240,000 in perpetuity. The firm's current WACC is 15% and can borrow at 8%. The corporate tax rate is 35%. MalikCo also has 10,000 shares outstanding. The firm issues debt of Rs. 140,000 and uses the proceeds to fund a share repurchase. 1. Find the value of the unlevered firm. 2. What is the price of each share in the firm? 3. What is the value of the levered firm right after debt is issued? 4. If markets are weak-form efficient, what is the price of each share prior to share repurchase but after the debt is issued. 5. How many shares will be repurchased? (round to the nearest whole number) 6. What is the number of outstanding shares? (round to the nearest whole number) 7. What is the equity value after recapitalization is done? 8. What is the price of each share after the repurchase of shares is done? 9. What is the cost of levered equity after the debt issue? (write to one decimal place, without % sign) 10. What is the WACC after the debt issue? (write to one decimal place, without % sign) B
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