Nichols Corporation’s value of operations is equal to $500 million after arecapitalization (the firm had no debt before the recap). It raised $200 millionin new debt and used this to buy back stock. Nichols had no short-term investments before or after the recap. After the recap, wd = 40%. What is S (the valueof equity after the recap)?
Nichols Corporation’s value of operations is equal to $500 million after arecapitalization (the firm had no debt before the recap). It raised $200 millionin new debt and used this to buy back stock. Nichols had no short-term investments before or after the recap. After the recap, wd = 40%. What is S (the valueof equity after the recap)?
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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Nichols Corporation’s value of operations is equal to $500 million after a
recapitalization (the firm had no debt before the recap). It raised $200 million
in new debt and used this to buy back stock. Nichols had no short-term investments before or after the recap. After the recap, wd = 40%. What is S (the value
of equity after the recap)?
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