Novina Inc. is an all-equity funded firm with 120 million shares trading at $25/share, with a cost of equity (and capital) of 13.5%. The firm is considering borrowing $1.5 billion and using the entire proceeds to buy back shares, an action that it believes will lower its cost of capital to 11%. Assuming that the firm is right in its belief and that it is a mature firm with no growth expected in the future, estimate the price at which shares were bought back, if the price per share for the remaining shares after the buyback is $30/share.

a.

24.52

b.

17.30

c.

31.73

d.

48.65

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