Kurz Manufacturing is currently an all-equity firm with

1717

million shares outstanding and a stock price of

$ 5.00$5.00

per share. Although investors currently expect Kurz to remain an all-equity firm, Kurz plans to announce that it will borrow

$ 50$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

30 %30%

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

$nothing

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 shields) just after the debt is issued, but before the shares are repurchased is

$nothing

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

$nothing.

(Round to the nearest cent.) The number of shares that Kurz will repurchase is

nothing

million. (Round to two decimal places.)

d. What are Kurz's market value balance sheet, and share price after the share repurchase?

The market value of assets is

$nothing

million.(Round to one decimal place.)The debt is

$nothing

million. (Round to the nearest integer.)The market value of equity is

$nothing

million.(Round to one decimal place.)Share price after repurchase is

$nothing.

(Round to two decimal

places.)

Enter your answer in each of the answer boxes.