Unformatted text preview: k d × D × t )/ k d = D × t. Post-announcement share price = P N = Pre-Announcement Price + D × t /shares outstanding. Number of shares repurchased = D / P N . Cost of Equity = Risk Free Rate(Given in Ex. 8) + Beta*(MRP=5%) WACC: Use MV weights and Debt Rate provided and Cost of Equity calculated b. Discuss what scenario investors would prefer and what the tradeoff is for investors as the firm adds leverage. Conclude with which scenario you recommend and why. 3. What is the case for not doing recapitalization? 1 2...
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- Spring '17