A Company X, Inc., is an all-equity firm with assets worth $2.5 billion and 1 billion shares outstanding. Company X plans to borrow $1 billion and use these funds to repurchase shares. The firms corporate tax rate is 25%, and Company X plans to keep its outstanding debt equal to $1 billion permanently. Points to note: What is the market price per share? Just AFTER Company X borrows $1B, but BEFORE it repurchases the stock, it is entitled to a tax shield. What is the value of the company (including the cash on hand from borrowing)? Now subtract the cash AFTER repurchase is made. What is the price per share now?