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Your all equity firm has a price per share of $18 and has 7M shares outstanding. Suppose the firm issue $12M worth of debt. The

Your all equity firm has a price per share of $18 and has 7M shares outstanding. Suppose the firm issue $12M worth of debt. The debt has a face value of $12M, a coupon rate of 7 percent, and 8 years until maturity. The expected return on the debt is 7 percent. Assume a corporate tax rate of 35%.

What is the new share price after issuing this debt?

		18.60
		18.00
		18.25

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