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?

Paradise Travels is an all-equity firm that has 9,000 shares of stock outstanding at a market price of $27 a share. Management has decided to issue $25,000 worth of debt and use the funds to repurchase shares of the outstanding stock. The interest rate on the debt will be 7.3 percent. What are the earnings per share at the break-even level of earnings before interest and taxes? Ignore taxes.

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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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Simone's Sweets is an all-equity firm that has 9,100 shares of stock outstanding at a market price of $27 per share. The firm's management has decided to issue $88,000 worth of debt at an interest rate of 6 percent. The funds will be used to repurchase shares of the outstanding stock. What are the earnings per share at the break-even EBIT?

Digital Fruit is financed solely by common stock and has outstanding 43 million shares with a market price of $10 a share. It now announces that it intends to issue $340 million of debt and to use the proceeds to buy back common stock. There are no taxes. a. What is the expected market price of the common stock after the announcement? b. How many shares can the company buy back with the $340 million of new debt that it will issue? Note: Enter your answer in millions rounded to 1 decimal place. c. What is the market value of the firm (equity plus debt) after the change in capital structure?

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