GloboChem is an all-equity firm. Analysts expect GloboChem to generate free cash flow of $3M at the end of the current year and they expect those cash flows to grow at 2.5% in perpetuity. GloboChem has 4 million shares outstanding, which trade for $20 per share, and stockholders require a return of 6.25%. The tax rate is 35%. The GloboChem CFO is considering a recapitalization. It will borrow (at kD = 5%) and use the<\/p>
borrowed funds to repurchase shares. It targets a capital structure with a debt-to-value ratio of 40%. After the recapitalization, the WACC will be 5.55% and the value of the firm will rise to $98.3607 million. If the company offers $24.58 for shares in the repurchase, what will the stock price be after the repurchase?<\/p>", "transcribed_text": "", "related_book": { "title": "Managerial Accounting An Introduction to Concepts Methods and Uses", "isbn": "1111822239, 324639767, 9781111822231, 978-0324639766", "edition": "10th Edition", "authors": "Michael W. Maher, Clyde P. Stickney, Roman L. Weil", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/137.jpg", "uri": "\/textbooks\/managerial-accounting-an-introduction-to-concepts-methods-and-uses-10th-edition-137", "see_more_uri": "" }, "free_related_book": { "isbn": "0782123430", "uri": "\/textbooks\/mastering-network-security-1st-edition-978-0782123432-141334", "name": "Mastering Network Security", "edition": "1st Edition" }, "question_posted": "2024-06-10 01:35:03", "see_more_questions_link": "\/study-help\/questions\/business-economics-2023-September-08", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/for-the-frame-and-loading-shown-determine-the-components-of-35118", "description": "For the frame and loading shown, determine the components of all forces acting on member ABE. -3.6 m- 2.7 m 3.6 kN 2.7 m 15 m 4.8 m", "stars": 3 }, { "url": "\/return-to-the-windsor-general-hospital-problem-p1234-for-each", "description": "Return to the Windsor General Hospital problem, P12.34. 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