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XYZ Co. is financed with debt and equity. The market value of this firm (debt plus equity) is $400 million. The debt is $150 million
XYZ Co. is financed with debt and equity. The market value of this firm (debt plus equity) is $400 million. The debt is $150 million and there are 10 million shares outstanding. The company is considering three distinct uses of $50 million in cash that is not needed for working capital. For each alternative, calculate the following (ignoring tax considerations): Market price of common stock, shares outstanding, and firm value a) Pay a cash dividend of $5 per share. b) Use the $50 million to repurchase common shares in the market. c) Invest $50 million in a new (previously unanticipated) investment project whose NPV is
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