What is the market capitalization of abc company

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Use the following information to answer the question(s) below. ABC company is an all-equity firm with 200 million shares outstanding, which are currently trading at $20 per share. Last month, ABC company announced that it will change its capital structure by issuing $800 million in debt. The $600 million raised by this issue, plus another $400 million in cash that ABC company already has, will be used to repurchase existing shares of stock. Assume that capital markets are perfect.

1) What is the market capitalization of ABC company before this transaction takes place?

2) What is the market capitalization of ABC company after this transaction takes place?

3) At the conclusion of this transaction, what is the number of shares that ABC company will repurchase?

4) At the conclusion of this transaction, what is the number of shares that ABC company will have outstanding?

5) At the conclusion of this transaction, what is the value of a share of ABC company?

Reference no: EM132698132

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