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What is the value of kd unlevered equity

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KD Industries has 30 million shares outstanding with a market price of $20 per share and no debt. It has had consistently stable earnings, and pays a 35% tax rate. Its management plans to borrow $200 million on a permanent basis through a leveraged recapitalization in which they would use the borrowed funds to repurchase outstanding shares.

-What is the value of KD's unlevered equity?

-What is the preset value of KD's interest tax shield?

-After the recapitalization, what is the total value of KD as a levered firm?

-After the recapitalization, what is the value of KD's levered equity?

-After the recapitalization, what is value of each share of KD's stock?

Reference no: EM132515809

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