Omega Tech has 20 million shares outstanding with a market price of 15 per share and no

debt. The corporate tax rate is 21% and all the other Modigliani-Mille assumptions hold. The

rate of return on risk-free securities is 5%, the risk premium on the market portfolio is 12%,

and the beta of Omega Tech is 0.7.

Omega Tech decides to continue to be an all equity firm and to distribute to its

shareholders 50 million through a share repurchase. Compute:

i. How many shares will Omega Tech repurchase;

ii. The new share price;

iii. The value of equity after the repurchase.

Comment your results.