None Charleston Mills is an all-equity firm with a totalmarket value of $221,000. The firm has 8,000shares of stock outstanding. Management isconsidering issuing $50,000 of debt at aninterest rate of 7 percent and using theproceeds on a stock repurchase. Ignore taxes.How many shares can the firm repurchase if itissues the debt securities?

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Answered: Charleston Mills is an all-equity firm…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter15: Capital Structure Decisions

Section: Chapter Questions

Problem 11P: The Rivoli Company has no debt outstanding, and its financial position is given by the following...

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The Rivoli Company has no debt outstanding, and its financial position is given by the following data: What is Rivoli’s intrinsic value of operations (i.e., its unlevered value)? What is its intrinsic stock price? Its earnings per share? Rivoli is considering selling bonds and simultaneously repurchasing some of its stock. If it moves to a capital structure with 30% debt based on market values, its cost of equity, rs, will increase to 12% to reflect the increased risk. Bonds can be sold at a cost, rd, of 7%. Based on the new capital structure, what is the new weighted average cost of capital? What is the levered value of the firm? What is the amount of debt? Based on the new capital structure, what is the new stock price? What is the remaining number of shares? What is the new earnings per share?
The Palantir is an all-equity firm with a total market value of $536,000 and 21,200 shares of stock outstanding. Management is considering issuing $133,000 of debt at an interest rate of 9 percent and using the proceeds on a stock repurchase. Ignore taxes. How many shares will the firm repurchase if it issues the debt securities?
nonee
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 the is issues the debt securities? A- 1,810 shares B- 1,818 shares C- 1,847 shares D- 1,856 shares E-1,899 shares
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Simone's sweets is an all-equity firm that has 6700 shares of stock outstanding at a market price of $18 per share. The firm's management has decided to issue $56000 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?
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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A firm has no debt outstanding and a total market value of $786,590. Earnings before interest and taxes, EBIT, are projected to be $74, 500. The company is considering a $30,940 debt issue with an interest rate of 8%. The proceeds will be used to repurchase shares of stock. There are currently 33,050 shares outstanding. Ignore taxes for this problem. How many shares were repurchased under this plan? A) 1235 B)1170 C) 1105 D)1365 E) 1300
Equity Inc. is currently an all-equity-financed firm. It has 10,000 shares outstanding that sell for $20 each. The firm has an operating income of $30,000 & pays no taxes. the firm contemplates a reconstructing that would issue $50,000 in 8% debt which will be used to repurchase stock. Show the value of the firm, EPS (earnings p. share?) and rate of return on the stock before and after reconstructing. What changed?
The Greenbriar is an all-equity firm with a total market value of $551,000 and 21,700 shares of stock outstanding. Management is considering issuing $153,000 of debt at an interest rate of 9 percent and using the proceeds on a stock repurchase. Ignore taxes. How many shares will the firm repurchase if it issues the debt securities? Multiple Choice • 49,590 shares • 542 shares 6,026 shares 6,695 shares 7,304 shares

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