Question
Dew It Inc. is an all-equity firm with assets worth $360 and 20 shares outstanding. This company plans to borrow $200 and use these funds
Dew It Inc. is an all-equity firm with assets worth $360 and 20 shares outstanding. This company plans to borrow $200 and use these funds to repurchase shares. The firms corporate tax rate is 20%, and it plans to keep its outstanding debt equal to $200 permanently. Suppose Dew It offers $50.00 per share, and shareholders tender their shares at this price. Which of the following amounts will Dew Its share price be closest to after the repurchase?
| $10 | ||
| $20 | ||
| $30 | ||
| $40 |
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Corporate Finance Principles And Practice
Authors: Denzil Watson, Antony Head
5th Edition
0273725343, 978-0273725343
