Z Industries has 125 million shares outstanding and has a marginal corporate tax rate of 35%. XYZ announces that it will use $75 million in excess cash to investors repurchase shares. Shareholders had previously assumed that XYZ would retain this excess cash permanently. The amount XYZt's share price can be expected to change upon this announcement is closest to
Z Industries has 125 million shares outstanding and has a marginal corporate tax rate of 35%. XYZ announces that it will use $75 million in excess cash to investors repurchase shares. Shareholders had previously assumed that XYZ would retain this excess cash permanently. The amount XYZt's share price can be expected to change upon this announcement is closest to
Chapter20: Financing With Derivatives
Section: Chapter Questions
Problem 8P
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XYZ Industries has 125 million shares outstanding and has a marginal corporate tax rate of 35%. XYZ announces that it will use $75 million in excess cash to investors repurchase shares. Shareholders had previously assumed that XYZ would retain this excess cash permanently. The amount XYZt's share price can be expected to change upon this announcement is closest to:
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