What is the expected share price post-buyback

Assignment Help Financial Management

Reference no: EM132030577

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.

a) If WyoOne Corp. announces a share buyback program at $22.5 per share, how many shares (in millions) can the company buyback?

b) If WyoOne Corp. announces a share buyback program at $22.5, how many shares (in millions) will be remaining after the buyback?

c) If WyoOne Corp. announces a share buyback program at $22.5 per share, what is the dollar amount of premium (in millions) paid to selling shareholders?

d) If WyoOne Corp. announces a share buyback program at $22.5 per share, what is the dollar value (in millions) accruing to remaining shareholders?

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

Reference no: EM132030577

Questions Cloud

How much depreciation expense should the company claim : The company uses the sum-of-the-years'-digits method of depreciation. How much depreciation expense should the company claim for year 2017

What are some key communication competencies needed : Leadership communication skills are very important. Some would call effective communication the most important leadership competency.

What is your organizations value proposition : What is your organization's value proposition (How does it deliver value that satisfies the target's wants and needs?)?

What is the account balance : You are planning to invest $10,000 today in an account paying 5% of annual interest rate, What is the account balance 20 years from today

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

Discuss about technical application of term stare decisis : Spotlight on AOL - Common Law. Please do not worry about technical application of the term "stare decisis." Stare decisis simply means how similar.

What will the price be in six years : The last dividend paid was $1.60 per share. Investors require a 14% return on their investment. What will the price be in 6 years

Government collections and revenue : How do tax reform initiatives affect government collections and revenue?

Discuss the process of mergers and acquisitions : As part of the financial planning process, a common practice in the corporate finance world is restructuring through the process of mergers and acquisitions.

User Account

All Pages