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Alisiya [41]
3 years ago
9

The firm is currently an all-equity firm with assets worth $250 million and 100 million shares outstanding. The firm plans to bo

rrow $100 million and use these funds to repurchase shares. The firm’s marginal corporate tax is 20%, and it plans to keep its outstanding debt equal to $100 million permanently. What is the lowest price per share the firm can offer and have shareholders tender their shares? A) $3.50 B) $1.50 C) $1.70 D) $2.50 E) $2.70
Business
1 answer:
4vir4ik [10]3 years ago
7 0

Answer:

C) $1.70

Explanation:

The value of the firm after the debt would be = 250 million + (20% * 100 million) =  $270 million

Value of equity = Total value of firm - Value of debt

Value of equity = $270 million - $100 million

Value of equity = $170 million

The total number of share outstanding is 100 million shares

Hence, he should offer the shares at = $170 million / 100 million shares = $1.7 per share

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Answer:

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4 years ago
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3 0
4 years ago
Which of the following would cause a leftward shift of the supply curve for computers? A. an increase in the price of printed ci
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Answer:

The answer is A.

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Printed circuit boards is one of the materials used to build computers and since the price has increased, the cost of producing computer also increases and this will make the producers to produce less, shifting the supply curve to the left.

6 0
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