Tardy Navigators (TN) has 20 million shares outstanding with a current market price of $15 per share and no debt. It has had stable earnings and a 21% tax rate. The CFO plans to borrow $100 million on a permanent basis and use the borrowed funds to repurchase outstanding shares.

What is the value of the firm before the recapitalization? $300M

What is the value of the interest tax shield? $21M

What is the value of the levered firm? $321M

Upon announcement of the repurchase, what will the new share price be? $16.05

How many shares will be outstanding after the CFO repurchases shares? 13.77M

What will happen if the company offers to tender the shares for a price higher than the optimal price? Oversubscription What will happen if the company offers to tender shares for a lower price than the optimal price? Undersubscribed

Please explain how these answers are found without excel