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What will be the market value of equity after the repurchase

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Problem 1: Motiwala Markets is an all-equity firm that has 500,000 shares of stock outstanding. The company is in the process of borrowing $2.2 million at five percent interest to repurchase 40,000 of the firm's outstanding shares. Ignore taxes. What will be the market value of equity after the repurchase?

A. $27.5 million

B. $23.1 million

C. $18.7 million

D. $20.9 million

E. $25.3 million

Reference no: EM132962572

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