Charleston Mills is an all-equity firm with a total market value of $221,000. The firm has 8,000 shares of stock outstanding. Management is considering issuing $50,000 of debt at an interest rate of 7 percent and using the proceeds on a stock repurchase. Ignore taxes. How many shares can the firm repurchase if it issues the debt securities?

Refi Corporation is planning to repurchase part of its common stock by issuing corporate debt. As a result, the firm’s debt-equity ratio is expected to rise from 30 percent to 50 percent. The firm currently has $2.7 million worth of debt outstanding. The cost of this debt is 9 percent per year. The firm expects to have an EBIT of $1.26 million per year in perpetuity and pays no taxes.    a. What is the market value of the firm before and after the repurchase announcement? (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) b. What is the expected return on the firm’s equity before the announcement of the stock repurchase plan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the expected return on the equity of an otherwise identical all-equity firm? (Do not round intermediate calculations and…

Refi Corporation is planning to repurchase part of its common stock by issuing corporate debt. As a result, the firm’s debt-equity ratio is expected to rise from 35 percent to 50 percent. The firm currently has $3.1 million worth of debt outstanding. The cost of this debt is 8 percent per year. The firm expects to have an EBIT of $1.3 million per year in perpetuity and pays no taxes.    a. What is the market value of the firm before and after the repurchase announcement? (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) b. What is the expected return on the firm’s equity before the announcement of the stock repurchase plan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the expected return on the equity of an otherwise identical all-equity firm? (Do not round intermediate calculations and…

Mayr Inc. currently has no debt in its capital structure. It has 50,000 shares outstanding that are selling for $158. The firm's expected EBIT is $400,000 and it pays 30% taxes. The managers are considering issuing $2,000,000 in debt. They will have to pay 4.50% interest on these bonds. They plan to use the proceeds of the bond issue to repurchase shares at the current market price. Calculate the EPS of the firm at both the original and relevered capital structures. If they execute the bond issue and share repurchase what will be the increase or decrease in EPS? EPS will remain the same. EPS will decrease by $0.26. EPS will decrease by $1.26. EPS will decrease by $2.31. EPS will increase by $0.21.

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An all-equity firm has expected earnings of $14,200 and a market value of $82,271. The firm is planning to issue $15,000 of debt at 6.3 percent interest and use the proceeds to repurchase shares at their current market value. Ignore taxes. What will be the cost of equity after the repurchase?

Good Values, Inc., is all-equity-financed. The total market value of the firm currently is $100,000, and there are 2,000 shares outstanding. The firm has declared a $5 per share dividend. Now suppose that instead of paying a dividend Good Values plans to repurchase $10,000 worth of stock. Ignore taxes. a. What will be the stock price before and after the repurchase? b. Suppose an investor who holds 200 shares sells 20 of her shares back to the firm. If there are no taxes on dividends or capital gains, show that she should be indifferent between the repurchase and the dividend. c. Show that if dividends are taxed at 30% and capital gains are not taxed, the value of the firm is higher if it pursues the share repurchase instead of the dividend.

Cross Town Cookies is an all-equity firm with a total market value of $695,000. The firm has 46,000 shares of stock outstanding. Management is considering issuing $146,000 of debt at an interest rate of 8 percent and using the proceeds to repurchase shares. Before the debt issue, EBIT will be $60,800. What is the EPS if the debt is issued? Ignore taxes. Multiple Choice $1.46 $.98 $1.20 $1.35

Brealey Corporation is currently all equity financed and has a value of $95 million. Investors currently require a return of 14.20 percent on common stock. Brealey pays no taxes. Brealey plans to issue $35 million of debt with a return of 4.1 percent and use the proceeds to repurchase common stock. What will be the value of the firm after the debt issue? Please state your answer in millions. Enter your response below. 95 Correct response: 95million This question has 4 parts, so you will be clicking verify 4 times. Given that the firm will still have a value of $95 million, what will be the value of the equity after the debt issue? Please state your answer in millions. Enter your response below. Number million

An unlevered firm has expected earnings of $2,401 and a market value of equity of $19,600. The firm is planning to issue $4,000 of debt at 6 percent interest and use the proceeds to repurchase shares at their current market value. Ignore taxes. What will be the cost of equity after the repurchase?