{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-06-06T14:06:13-04:00", "answer_date": "2024-06-06 14:06:13", "is_docs_available": "", "is_excel_available": "", "is_pdf_available": "", "count_file_available": 0, "main_page": "student_question_view", "question_id": "2370042", "url": "\/study-help\/questions\/company-is-expected-to-generate-ebit-of-7-million-annually-2370042", "question_creation_date_js": "2024-06-06T14:06:13-04:00", "question_creation_date": "Jun 06, 2024 02:06 PM", "meta_title": "[Solved] COMPANY IS EXPECTED TO GENERATE EBIT OF $ | SolutionInn", "meta_description": "Answer of - COMPANY IS EXPECTED TO GENERATE EBIT OF $7 MILLION ANNUALLY STARTING IN ONE YEAR. COMPANY IS ALL-EQUITY FINANCED WITH | SolutionInn", "meta_keywords": "company,expected,generate,ebit,$7,million,annually,starting,one,year,-equity,financed", "question_title_h1": "COMPANY IS EXPECTED TO GENERATE EBIT OF $7 MILLION ANNUALLY STARTING IN ONE YEAR. COMPANY IS ALL-EQUITY FINANCED WITH 2 MILLION SHARES OUTSTANDING AND SHAREHOLDERS", "question_title": "COMPANY IS EXPECTED TO GENERATE EBIT OF $7 MILLION ANNUALLY STARTING IN", "question_title_for_js_snippet": "COMPANY IS EXPECTED TO GENERATE EBIT OF $7 MILLION ANNUALLY STARTING IN ONE YEAR COMPANY IS ALL EQUITY FINANCED WITH 2 MILLION SHARES OUTSTANDING AND SHAREHOLDERS REQUIRE RETURN OF 9 TAX RATE IS 35 COMPANY THINKING OF ISSUING $5 MILLION OF CONTINOUS BONDS WITH AN ANNUAL COUPON RATE OF 6 THE COMPANY USES THE $5MILLION OF DEBT TO REPURCHASE STOCK ASSUME THAT THE COMPANY NEVER INCREASES OR DECREASES DEBTS AFTER BORROWING WHAT PRICE SHOULD COMPANY OFFER TO REPURCHASE SHARES SO THAT THE REPURCHASE PRICE IS A 5 PREMIUM OVER THE POST REPURCHASE PRICE ", "question_description": "

COMPANY IS EXPECTED TO GENERATE EBIT OF $7 MILLION ANNUALLY STARTING IN ONE YEAR. COMPANY IS ALL-EQUITY FINANCED WITH 2 MILLION SHARES OUTSTANDING AND SHAREHOLDERS REQUIRE RETURN OF 9%. TAX RATE IS 35%. COMPANY THINKING OF ISSUING $5 MILLION OF CONTINOUS BONDS WITH AN ANNUAL COUPON RATE OF 6%. THE COMPANY USES THE $5MILLION OF DEBT TO REPURCHASE STOCK. ASSUME THAT THE COMPANY NEVER INCREASES OR DECREASES DEBTS AFTER BORROWING. WHAT PRICE SHOULD COMPANY OFFER TO REPURCHASE SHARES SO THAT THE REPURCHASE PRICE IS A 5% PREMIUM OVER THE POST-REPURCHASE PRICE?<\/p>", "transcribed_text": "", "related_book": { "title": "Essentials Of Forensic Accounting", "isbn": "1948306441, 978-1948306447", "edition": "2nd Edition", "authors": "Michael A Crain, William S Hopwood", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/2021\/11\/6180cb73a5085_6436180cb7324789.jpg", "uri": "\/textbooks\/essentials-of-forensic-accounting-2nd-edition-9-78e-12", "see_more_uri": "" }, "free_related_book": { "isbn": "1636201040", "uri": "\/textbooks\/georgia-milestones-assessment-system-subject-test-mathematics-grade-3-student-practice-workbook-two-full-length-gmas-math-tests-1st-edition-978-1636201047-350521", "name": "Georgia Milestones Assessment System Subject Test Mathematics Grade 3 Student Practice Workbook + Two Full Length Gmas Math Tests", "edition": "1st Edition" }, "question_posted": "2024-06-06 14:06:13", "see_more_questions_link": "\/study-help\/questions\/business-accounting-2024-September-22", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/using-the-information-provided-in-c142-prepare-each-of-the", "description": "Using the information provided in C14-2, prepare each of the following for the City of Carrollton, Texas, for the year ended September 30, 20X1. 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