Roys Toys, Inc. is currently an all-equity firm with 500,000 shares of outstanding equity and a stock price of $10 per share. The firm is contemplating a restructuring that would involve issuing $1 million in debt and using all the proceeds to repurchase outstanding equity. The debt would have an interest rate of 8% and equity would be repurchased at a price of $10 per share. Assume that markets are perfect (no taxes, no bankruptcy, etc.). How many shares will be repurchased if the firm conducts the restructuring?

50,000 shares

75,000 shares

120,000 shares

100,000 shares