The Greenbriar is an all-equity firm with a total market value of $551,000 and 21,700 shares of stock outstanding. Management is considering issuing $153,000 of debt at an interest rate of 9 percent and using the proceeds on a stock repurchase. Ignore taxes. How many shares will the firm repurchase if it issues the debt securities?
Multiple Choice
49,590 shares
542 shares
6,026 shares
6,695 shares
7,304 shares
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Answer:
Answer:
$6,026
Explanation:
The computation of the repurchase shares is shown below:
= Debt value ÷ market price per share
where,
Total market value is $551,000
And, the market price share would be
= Total market value ÷ outstanding stock
= $551,000 ÷ 21,700 shares
= $25.39
Now put these values to the above formula
So, the shares would be equal to
= $153,000 ÷ $25.39
= $6,026
Explanation:
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