ABC COMPANY FISCAL YEAR ENDING: 7/30/2019 ASSETS: 7,726,000,000 DEBT: 3,536,000,000 SHARES: 307,000,000 REVENUE: 7,890,000,000 EBIT: 1,405,000,000 INTEREST: 112,000,000 NET INCOME: 887,000,000 STOCK PRICE: $49.72 TAX PAID: 406,000,000 TAX RATE: 31.40% Consider the ff: scenario The management team is considering the possibility of increasing the firms use of debt capital. They propose to implement a leverage repurchase, under which the firm would buy back 10% of the outstanding shares, issuing Long-term debt as needed to finance the transaction. Repurchase Ratio= 10% How many shares would be repurchased? Answer_______________________________ How much would the firm need to borrow to fund this purchase? (ignoring transaction cost and market price effects) ? Answer______________________________ Based on the interest rate estimated in Task #1, how much (in dollars) would this add to the annual interest expense? Answer:_______________________________________ Under this proposal, calculate the following (assuming the proposed transaction has been completed): Shares outstanding: _________________ Debt:________________ Interest Expense:____________________ Net Income: _________________________ Earnings per share: _________________ Debt/Assets ratio:___________________ Debt/Equity ratio:____________________ Value of interest tax shield:______________ Breakeven EBIT: ______________________ How much would the proposed restructuring add to the value of the firm? Answer:________________________ Do you think the proposed restructuring should proceed? Why or why not? Answer: _________________________