Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Phylo Inc. currently has 8 million shares outstanding, trading at $ 2 3 . 8 4 . The stock's beta is 1 . 2 .

Phylo Inc. currently has 8 million shares outstanding, trading at $23.84. The stock's beta is 1.2. The book value of equity is $57.22 million, and the book value of long-term debt is 0. Treasuries yield 0.6% and the expected return on the S&P 500 is 5%.
The company is thinking of issuing 92,000 bonds with a par value of $1,000 to repurchase its own stock. The yield to maturity on similar bonds issued by other companies is 5%. The average tax rate is 34%.
What is the current market value of equity (in $ million)?
What is the total current value of the company before announcing the restructuring (in $ million)?
What is the company's current WACC?
How much debt does the company want to issue (in $ million)?
What is the value of the company after the restructuring (in $ million)?
What is the new value of equity (in $ million)?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Repo Handbook

Authors: Moorad Choudhry

1st Edition

0750651628, 978-0750651622

More Books

Students also viewed these Finance questions

Question

9. Describe the characteristics of power.

Answered: 1 week ago

Question

10. Describe the relationship between communication and power.

Answered: 1 week ago