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Firm B is an all-equity firm with an equity beta of 1 and a stock price of $10. Its equity cost of capital is 15%.

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Firm B is an all-equity firm with an equity beta of 1 and a stock price of $10. Its equity cost of capital is 15%. The firm has 1 million shares. Suppose it issues $5 million in permanent debt to repurchase its stocks. The beta of the debt is 0.1, the risk-free rate is 0%, and the corporate tax rate is 20%. a. What is the present value of the interest tax shield? b. What is the firm's enterprise value VL after the stock repurchase? c. What is the firm's stock price after the stock repurchase? d. How many shares are left after the stock repurchase? e. What is firm B's equity beta after the stock repurchase? f. What is firm B's equity cost of capital after the stock repurchase? Suppose that prior to this transaction, firm Bs expected earnings per share this coming year is $2 g. What is firm Bs expected earnings per share after the stock repurchase? Firm B is an all-equity firm with an equity beta of 1 and a stock price of $10. Its equity cost of capital is 15%. The firm has 1 million shares. Suppose it issues $5 million in permanent debt to repurchase its stocks. The beta of the debt is 0.1, the risk-free rate is 0%, and the corporate tax rate is 20%. a. What is the present value of the interest tax shield? b. What is the firm's enterprise value VL after the stock repurchase? c. What is the firm's stock price after the stock repurchase? d. How many shares are left after the stock repurchase? e. What is firm B's equity beta after the stock repurchase? f. What is firm B's equity cost of capital after the stock repurchase? Suppose that prior to this transaction, firm Bs expected earnings per share this coming year is $2 g. What is firm Bs expected earnings per share after the stock repurchase

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