100038050_HW13 - $10,000,000 Debt $- Tax shield $800,000...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Problem 24 a) Taxes = $600,000 The return on the unlevered equity: R = 9% b) The company's market value balance sheet berofe the anouncement Debt $- Assets $10,000,000 Equity $10,000,000 Total assets $10,000,000 Total $10,000,000 Price per share = $20 c) Present value of tax shield = $800,000 The value of Green Manufacturing after the repurchase agreement: $10,800,000 Assets
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: $10,000,000 Debt $- Tax shield $800,000 Equity $10,800,000 Total assets $10,800,000 Total $10,800,000 d) new share price = $21.60 e) shares repurchased = $92,592.59 new shares outstanding = $407,407.41 f) market value of equity = $8,800,000 Assets $10,000,000 Debt $2,000,000 Tax shield $800,000 Equity $8,800,000 Total assets $10,800,000 Total $10,800,000 g) Rs = 9.41%...
View Full Document

This note was uploaded on 04/24/2010 for the course BUS 306 taught by Professor Lomev during the Fall '09 term at American University in Bulgaria.

Ask a homework question - tutors are online