Question

Assume that WyoOne Corp. recently moved to its optimal capital structure by issuing $4,000mn additional debt...

Assume that WyoOne Corp. recently moved to its optimal capital structure by issuing $4,000mn additional debt and this move resulted in an increase of $2,500mn in firm value. There are 800mn shares outstanding and the current stock price is $17.5. WyoOne corp. intends to buy back shares with the proceeds from debt. Use this information to answer the following questions.

6) If WyoOne Corp. announces a share buyback program at $22.5, what is the expected share price post-buyback?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Hank Fine Steakhouse has a long-term debt with a market value of $100.56 million and has...
Hank Fine Steakhouse has a long-term debt with a market value of $100.56 million and has outstanding 15.60 million shares with a market price of $10 a share. It now announces that it intends to issue a further $55.44 million of debt and to use the proceeds to buy back common stock. Debtholders, seeing the extra risk, mark the value of the existing debt down to $60 million. With the new issued debt, how many shares can Hank buyback? (in...
XYZ Corp. wants to increase is debt-to-equity ratio from 0.25 to 1.0 by issuing debt and...
XYZ Corp. wants to increase is debt-to-equity ratio from 0.25 to 1.0 by issuing debt and using the proceeds to buy back some of its equity. The current market value of the firm’s assets is $2,000 and there are 800 shares currently outstanding. The firm’s debt is risk-free and perpetual. The current risk-free rate is 6%. Assume the firm’s corporate tax rate is zero and that the share price is not affected by changes in capital structure. You currently own...
Assume that my optimal capital structure consists of 45% debt and 55% equity. I have $1,000...
Assume that my optimal capital structure consists of 45% debt and 55% equity. I have $1,000 outstanding bonds. Given the following information, calculate the firm’s WACC. rd= 8%. EBT = $100,000. Payout ratio = 55%. Tax rate = 30%. P0= $25. Growth = 1%. Shares outstanding = 10,000. Flotation cost on additional equity = 15%.
Assume an unlevered company chooses to alter its capital structure by adding debt and using the...
Assume an unlevered company chooses to alter its capital structure by adding debt and using the debt proceeds to reduce shares outstanding as to leave total invested capital unchanged. Absent any other changes, the company's earnings before interest and taxes (EBIT) can be expected to: Group of answer choices increase. decrease. remain unchanged. Assume an unlevered company chooses to alter its capital structure by adding debt and using the debt proceeds to reduce shares outstanding as to leave total invested...
Executive Cheese has issued debt with a market value of $114.91 million and has outstanding 14.30...
Executive Cheese has issued debt with a market value of $114.91 million and has outstanding 14.30 million shares with a market price of $10 a share. It now announces that it intends to issue a further $64.39 million of debt and to use the proceeds to buy back common stock. Debtholders, seeing the extra risk, mark the value of the existing debt down to $62 million. a. Calculate the market price of the stock following the announcement. (Round your answer...
17. Given an optimal capital structure that is 40% debt, calculate the weighted average cost of...
17. Given an optimal capital structure that is 40% debt, calculate the weighted average cost of capital given the following additional information: Assume that the company has no outstanding preferred stock. (10 points)  Bond coupon rate 10%  Current market price of the bond $1000  Expected dividend on common stock $4  Common stock price $80  Constant growth rate for common stock 9%  The firm expects to pay total flotation costs of $50,000 when it issues...
Company TNT currently has zero debt in its capital structure, a total market value of $60...
Company TNT currently has zero debt in its capital structure, a total market value of $60 million, and an equity beta of 0.75. The company is considering a new capital structure, by issuing $25 million worth of debt and using the proceeds to buy back $25 million worth of equity (no impact on the firms total market value). The company’s corporate tax rate is 30%. Risk free rate is 6% and market return is 14%. How much would be the...
Review the following situation: Transworld Consortium Corp. is trying to identify its optimal capital structure. Transworld...
Review the following situation: Transworld Consortium Corp. is trying to identify its optimal capital structure. Transworld Consortium Corp. has gathered the following financial information to help with the analysis. Debt Ratio (%) Equity Ratio (%) EPS DPS Stock Price 30 70 1.55 0.34 22.35 40 60 1.67 0.45 24.56 50 50 1.72 0.51 25.78 60 40 1.78 0.57 27.75 70 30 1.84 0.62 26.42 Which capital structure shown in the preceding table is Transworld Consortium Corp.’s optimal capital structure? Debt...
Assume no taxes, no bankruptcy costs. Company U has no debt outstanding. The market value is...
Assume no taxes, no bankruptcy costs. Company U has no debt outstanding. The market value is € 410623, earnings before interest and taxes (EBIT) is € 55192 and the share price is € 42. Company U is considering a € 228388 debt issue with a 6% interest rate (the proceeds are used to buy back the shares). Calculate Earnings per share (EPS). How many shares will be bought back? Calculate earnings per share (EPS) after the debt issue.
Understanding the optimal capital structure Review this situation: Transworld Consortium Corp. is trying to identify its...
Understanding the optimal capital structure Review this situation: Transworld Consortium Corp. is trying to identify its optimal capital structure. Transworld Consortium Corp. has gathered the following financial information to help with the analysis. Debt Ratio Equity Ratio EPS DPS Stock Price 30% 70% 1.25 0.55 36.25 40% 60% 1.40 0.60 37.75 50% 50% 1.60 0.65 39.50 60% 40% 1.85 0.75 38.75 70% 30% 1.75 0.70 38.25 1) Which capital structure shown in the preceding table is Transworld Consortium Corp.’s optimal...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT