Question
Company A has $10 million in debt and 800.000 shares outstanding for $60 each. Company A is planning to issue $8 million in debt to
Company A has $10 million in debt and 800.000 shares outstanding for $60 each. Company A is planning to issue $8 million in debt to repurchase shares. Assume that Company A corporate texes are 34%, there is a premium of 10% to buyback stocks and the cost of debt is 7%. Stock price will increase after the repurshase? Is so, how much it will increase? (Using Excel)
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Contemporary Financial Management
Authors: R. Charles Moyer, William J. Kretlow, James R. Mcguigan
8th Edition
0324065914, 9780324065916
