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2 MalkCo is currently an all-equity firm with expected EBIT of Rs. 240,000 in perpetuity. The firm's current WACC is 16% and can borrow at 6%. The corporate tax rate is 35% MalkCo also has 10,000 shares outstanding The firm issues debit of Rs 140,000 and uses the proceeds to fund a share repurchase... 1 Find the value of the unlevered firm. 2. What is the price of each share in the firm? 3. What is the value of the levered firm right after debt is issued? 4. If markets are weak-form efficient, what is the price of each share prior to share repurchase but after the debt is issued 5. How many shares will be repurchased? (round to the nearest whole number) 6. What is the number of outstanding shares?) (round to the nearest whole number) 7. What is the equity value after recapitalization is done? 8. What is the price of each share after the repurchase of shares is done? What is the cost of levered equity after the debt issue? (write to one decimal place, without % sign) 10 What is the WACC after the debt issue? (write to one decimal place, without % sign)

2 MalkCo is currently an all-equity firm with expected EBIT of Rs. 240,000 in perpetuity. The firm's current WACC is 16% and can borrow at 6%. The corporate tax rate is 35% MalkCo also has 10,000 shares outstanding The firm issues debit of Rs 140,000 and uses the proceeds to fund a share repurchase... 1 Find the value of the unlevered firm. 2. What is the price of each share in the firm? 3. What is the value of the levered firm right after debt is issued? 4. If markets are weak-form efficient, what is the price of each share prior to share repurchase but after the debt is issued 5. How many shares will be repurchased? (round to the nearest whole number) 6. What is the number of outstanding shares?) (round to the nearest whole number) 7. What is the equity value after recapitalization is done? 8. What is the price of each share after the repurchase of shares is done? What is the cost of levered equity after the debt issue? (write to one decimal place, without % sign) 10 What is the WACC after the debt issue? (write to one decimal place, without % sign)

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation
Section: Chapter Questions
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W 2. MalikiCo is currently an all-equity firm with expected EBIT of Rs. 240,000 in perpetuity. The firm's current WACC is 16% and can borrow at 6%. The corporate tax rate is 35% MalikCo also has 10,000 shares outstanding The firm issues detit of Rs. 140,000 and uses the proceeds to fund a share repurchase.. 1 Find the value of the unlevered firm. 2. What is the price of each share in the firm? 3 What is the value of the levered firm right after debt is issued? 4. If markets are weak-form efficient, what is the price of each share prior to share repurchase but after the debt is issued 5. How many shares will be repurchased? (round to the nearest whole number) 6. What is the number of outstanding shares? (round to the nearest whole number) 7. What is the equity value after recapitalization is done? 8. What is the price of each share after the repurchase of shares is done? What is the cost of levered equity after the debt issue? (write to one decimal place, without % sign) 10 What is the WACC after the debt issue? (write to one decimal place, without % sign)
Transcribed Image Text:W 2. MalikiCo is currently an all-equity firm with expected EBIT of Rs. 240,000 in perpetuity. The firm's current WACC is 16% and can borrow at 6%. The corporate tax rate is 35% MalikCo also has 10,000 shares outstanding The firm issues detit of Rs. 140,000 and uses the proceeds to fund a share repurchase.. 1 Find the value of the unlevered firm. 2. What is the price of each share in the firm? 3 What is the value of the levered firm right after debt is issued? 4. If markets are weak-form efficient, what is the price of each share prior to share repurchase but after the debt is issued 5. How many shares will be repurchased? (round to the nearest whole number) 6. What is the number of outstanding shares? (round to the nearest whole number) 7. What is the equity value after recapitalization is done? 8. What is the price of each share after the repurchase of shares is done? What is the cost of levered equity after the debt issue? (write to one decimal place, without % sign) 10 What is the WACC after the debt issue? (write to one decimal place, without % sign)
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