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What is the market value of kurz existing assets

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Kurz Manufacturing is currently an all-equity ?rm, with 20 million shares outstanding and a stock price of $7.50 per share. Kurz plans to announce that it will borrow $50 million and use the funds to repurchase shares. Kurz will pay interest only on this debt, and it has no further plans to increase or decrease the amount of debt. Kurz is subject to a 40% corporate tax rate.

a. What is the market value of Kurz's existing assets before the announcement?

b. What are Kurz's 'market value' balance sheet and share price after the share repurchase? How many shares will be outstanding? See table 15.2 in the PowerPoint slides, and repeat the table with Kurz information.

Reference no: EM133070598

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