Kristian Vater & 11/10/215:57 PM Study v Test: Midt... Question 17 of 22 This test: 28 point(s) possible Submit test This question: 3 point(s) possible Hawar International is a shipping firm with a current share price of $5 26 and 9.9 million shares outstanding Suppose that Hawor announces plans to lower as corporate taxes by borrowing 520 4 million and repurchasing shares that Hawar pays a corporate tax rate of 30%, and that shareholders expect the change in debt to be permanent a. If the only imperfection is corporate taxes, what will be the share price after this announcement? b. Suppose the only imperfections are corporate taxes and financial distress costs. If the share price rises to 55 51 after this announcement what is the PV of financial distress costs Howar will incur as the result of this new debt? eidsplass gi bort siner til jul KJP HER NIVONATO a. If the only imperfection is corporate taxes, what will be the share price after this announcement? The share price after this announcement will be $ per share (Round to the nearest cent) b. Suppose the only imperfections are corporate taxes and financial distress costs of the share price rises to $5.51 after this announcement what is the PV of financial distress costs Hawar will incur as the result of this new debt? The PV of financial distress costs will be $ million (Round to two decimal places) - . - . Kristian Vater & 11/10/215:57 PM Study v Test: Midt... Question 17 of 22 This test: 28 point(s) possible Submit test This question: 3 point(s) possible Hawar International is a shipping firm with a current share price of $5 26 and 9.9 million shares outstanding Suppose that Hawor announces plans to lower as corporate taxes by borrowing 520 4 million and repurchasing shares that Hawar pays a corporate tax rate of 30%, and that shareholders expect the change in debt to be permanent a. If the only imperfection is corporate taxes, what will be the share price after this announcement? b. Suppose the only imperfections are corporate taxes and financial distress costs. If the share price rises to 55 51 after this announcement what is the PV of financial distress costs Howar will incur as the result of this new debt? eidsplass gi bort siner til jul KJP HER NIVONATO a. If the only imperfection is corporate taxes, what will be the share price after this announcement? The share price after this announcement will be $ per share (Round to the nearest cent) b. Suppose the only imperfections are corporate taxes and financial distress costs of the share price rises to $5.51 after this announcement what is the PV of financial distress costs Hawar will incur as the result of this new debt? The PV of financial distress costs will be $ million (Round to two decimal places)
