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Consider a publicly traded company that has 3 million shares, trading at $10/share and $30 million in debt. You believe that the value of the

  1. Consider a publicly traded company that has 3 million shares, trading at $10/share and $30 million in debt. You believe that the value of the firm will increase by 30% if it borrows $30 million and buys back stock. Assuming investors are rational, what would you expect to pay, per share, on the stock buyback?
    1. $8/share
    2. $10/share
    3. $14/share
    4. $16/share
    5. $18/share

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