Share repurchase: Share repurchase is the situation when a corporation purchases back its own shares because the company noticed that the shares are undervalued. This decline the number of shares left and enhances the value of the shares of the corporation. The share repurchases increase the corporation’s earnings for a share.
Tax: Tax is basically the money that individuals and business houses pay to the government for selling goods and providing services to the community. Simply, the tax is a charge by the government on the income of individuals as well as firms.
Tax Shield: Tax shield refers to a reduction in the taxable income of either the firm or the individual.
To determine:
The tax consequences of the recap.
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