A firm’s value of operations is equal to $800 million after arecapitalization. (The firm had no debt before the recap.) Thefirm raised $200 million in new debt and used this to buy backstock. The firm had no short-term investments before or after therecap. After the recap, wd = 25%. The firm had 10 million sharesbefore the recap. What is S (the value of equity after the recap)?($600 million) What is PPost (the stock price after the recap)?($80/share) What is nPost (the number of remaining shares afterthe recap)? (7.5 million)

A firm’s value of operations is equal to $800 million after arecapitalization. (The firm had no debt before the recap.) Thefirm raised $200 million in new debt and used this to buy backstock. The firm had no short-term investments before or after therecap. After the recap, wd = 25%. The firm had 10 million sharesbefore the recap. What is S (the value of equity after the recap)?($600 million) What is PPost (the stock price after the recap)?($80/share) What is nPost (the number of remaining shares afterthe recap)? (7.5 million)

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter14: Distributions To Shareholders: Dividends And Repurchases

Section: Chapter Questions

Problem 12P

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