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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. Use this information to answer the following questions.

1. 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?

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

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92867924

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