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If I can have the answers to the questions I obtained wrong Kurz Manufacturing is currently an all-equity firm with 20 million shares outstanding and
If I can have the answers to the questions I obtained wrong
Kurz Manufacturing is currently an all-equity firm with 20 million shares outstanding and a stock price of $7.50 per share. Although investors currently expect Kurz to remain an all-equity firm, Kurz plans to announce that it will borrow $50 million and use the funds to repurchase shares. Kurz will pay interest only on this debt, and it has no further plans to increase or decrease the amount of debt. Kurz is subject to a 25% corporate tax rate. a. What is the market value of Kurz's existing assets before the announcement? b. What is the market value of Kurz's assets (including any tax shields) just after the debt is issued, but before the shares are repurchased? c. What is Kurz's share price just before the share repurchase? How many shares will Kurz repurchase? d. What are Kurz's market value balance sheet and share price after the share repurchase? a. What is the market value of Kurz's existing assets before the announcement? The market value of Kurz's existing assets before the announcement is $ 150 million. (Round to one decimal place.) b. What is the market value of Kurz's assets (including any tax shields) just after the debt is issued, but before the shares are repurchased? The market value of Kurz's assets (including any tax shie Is) just after the debt is issued, but before the shares are repurchased, is $ 212.5 million. (Round to one decimal place.) c. What is Kurz's share price just before the share repurchase? How many shares will Kurz repurchase? Kurz's share price just before the share repurchase is $ 8.13. (Round to two decimal places.) Shares to be repurchased are 6.150 million. (Round to three decimal places.) d. What are Kurz's market value balance sheet and share price after the share repurchase? Market value of assets after share repurchase is $ 225 million. (Round to one decimal place.) Debt after share repurchase is $ 50 million. (Round to the nearest million.) Market value of equity after share repurchase is $ 112.50 million. (Round to one decimal place.) Share price after repurchase is $12.64. (Round to two decimal places.)Step by Step Solution
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