What is the price per share before the repurchase what is


A company is financed entirely with equity. It has 100,000 shares outstanding. The company proposes to issue $250,000 of debt at an interest rate of 10% per annum and repurchase 25,000 shares at market. The company pays no taxes (thus, the debt has no tax shield). Net income before the issuance of debt is expected to be $125,000.

(a) What is the price per share before the repurchase?

(b) What is the EPS before the repurchase?

(c) What is the P/E ratio before the repurchase?

(d) What is the price per share after the repurchase?

(e) What is the EPS after the repurchase?

(f) What is the P/E ratio after the repurchase?

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Financial Management: What is the price per share before the repurchase what is
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