What is stock current price per share

Assignment Help Financial Management

Reference no: EM131931129

Tartan Industries currently has total capital equal to $5 million, has zero debt, is in the 40% federal-plus-state tax bracket, has a net income of $2 million, and distributes 40% of its earnings as dividends. Net income is expected to grow at a constant rate of 5% per year, 120,000 shares of stock are outstanding, and the current WACC is 13.20%.

The company is considering a recapitalization where it will issue $1 million in debt and use the proceeds to repurchase stock. Investment bankers have estimated that if the company goes through with the recapitalization, its before-tax cost of debt will be 11% and its cost of equity will rise to 15.5%.

What is the stock's current price per share (before the recapitalization)? Round your answer to the nearest cent. Do not round intermediate steps. $

Assuming that the company maintains the same payout ratio, what will be its stock price following the recapitalization? Assume that shares are repurchased at the price calculated in part a. Round your answer to the nearest cent. Do not round intermediate steps.

Reference no: EM131931129

Questions Cloud

Allocated between speeches and mailing flyers : Assuming the politician wants to maximize votes, how should the budget be allocated between speeches and mailing flyers?

Write a paragraph on how you would define public health : Write a paragraph on how you would define public health. How is it different than personal health? What does it encompass?

What is a third party payment system : What concepts are unique to healthcare accounting? Think about the following before you answer: What is a third party payment system?

Research a health care organization or a network : Research a health care organization or a network that spans several states within the U.S. (Example: United Healthcare, Vanguard, Banner Healthcare, etc.).

What is stock current price per share : Assuming that the company maintains the same payout ratio, what will be its stock price following the recapitalization? What is stock's current price per share?

Summarize the information including health-related claims : Identify a source of the story information and provide reference to that which could be a website. Summarize the information, including health-related claims;

Explain disclosure assertions issues : Explain disclosure assertions issues related to investments Audit? For each of the following substantive procedures, first note whether it is a test of details.

Equilibrium price and quantities of natural gas : The market of natural gas is described by the following supply and demand equations:

What is your most important take-away from this case study : What is your most important take-away from this case study? Why?

User Account

All Pages