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Buggins Incorporated is financed equally by debt and equity, each with a market value of $ 1 . 5 million. The cost of debt is
Buggins Incorporated is financed equally by debt and equity, each with a market value of $ million. The cost of debt is and the cost of equity is Assume that the initial market value of equity is based on a perpetuity model with full dividend payout no growth The company now makes a further $ issue of debt and uses the proceeds to repurchase equity. The cost of debt is rising now to and the cost of equity to Assume the firm pays no taxes.
How much debt does the company now have? Note: Enter your Answer in Dollars.
How much equity does it now have? Note: Enter your Answer in Dollars.
What is the overall cost of capital?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to decimal place.
What is the percentage increase in earnings per share after the refinancing?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to decimal places.
What is the new priceearnings multiple?
Note: Round your answers to decimal place.
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