Kurz Manufacturing is currently an? all-equity firm with

21

million shares outstanding and a stock price of

$12.50

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

$35

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%

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?