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Taco Salad Manufacturing, Inc., plans to announce that it will issue ( $ 2 . 1 9 ) million of perpetual debt
Taco Salad Manufacturing, Inc., plans to announce that it will issue $ million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a coupon rate of percent. The company is currently allequity and worth $ million with shares of common stock outstanding. After the sale of the bonds, the company will maintain the new capital structure indefinitely. The annual pretax earnings of $ million are expected to remain constant in perpetuity. The tax rate is percent. a What is the expected return on the company's equity before the announcement of the debt issue? Do not round intermediate calculations and enter your answer as a percent rounded to decimal places, eg b What is the price per share of the company's equity? Do not round intermediate calculations and round your answer to decimal places, eg d What is the company's stock price per share immediately after the repurchase announcement? Do not round intermediate calculations and round your answer to decimal places, eg e How many shares will the company repurchase as a result of the debt issue? Do not round intermediate calculations and round your answer to decimal places, eg e How many shares of common stock will remain after the repurchase? Do not round intermediate calculations and round your answer to decimal places, eg g What is the required return on the company's equity after the restructuring? Do not round intermediate calculations and enter your answer as a percent rounded to decimal places, eg
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