Business, 27.12.2020 16:00 Hoeing3195

VanMannen Foundations, Inc. (VF) VanMannen Foundations, Inc. (VF) is a zero-growth company that currently has zero debt, and it has the data shown below. EBIT = $80,000
Growth = 0%
Orig cost of equity, rs = 10.0%
No. of shares = 10,000
Price per share = $60.00
Tax rate = 25%.

Refer to the data for VanMannen Foundations, Inc. (VF). Now assume that VF is considering changing from its original zero debt capital structure to a new capital structure with even more debt. This results in changes in the cost of debt and equity, and thus to a new WACC and a new value of operations. Assume VF raises the amount of new debt indicated below and uses the funds to purchase and hold T-bills until it makes the stock repurchase.

Required:
What is the stock price per share immediately after issuing the debt but prior to the repurchase?

Answers: 2

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VanMannen Foundations, Inc. (VF) VanMannen Foundations, Inc. (VF) is a zero-growth company that curr...

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