Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Tapley Inc. currently has total capital equal to $4 million, has zero debt, is in the 40% federal-plus-state tax bracket, has a net income of $4 million, and pays out 40% of its earnings as dividends. Net income is expected to grow at a constant rate of 3% per year, 340,000 shares of stock are outstanding, and the current WACC is 13.50%.

The company is considering a recapitalization where it will issue $1 million in debt and use the proceeds to repurchase stock. Investment bankers have estimated that if the company goes through with the recapitalization, its before-tax cost of debt will be 11% and its cost of equity will rise to 16.5%.

What is the stock's current price per share (before the recapitalization)? Round your answer to the nearest cent.

Assuming that the company maintains the same payout ratio, what will be its stock price following the recapitalization? Assume that shares are repurchased at the price find outd in Part a. Round your answer to the nearest cent. Do not round intermediate steps.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M939145

Have any Question? 


Related Questions in Basic Finance

1 what is the financial planning process what is a

1. What is the financial planning process? What is a strategic plan? Describe the roles that financial managers play with regard to strategic planning. 2. Briefly describe the following popular growth targets: (1) accoun ...

1 provide a definition and an example of strategic storage

1. Provide a definition and an example of strategic storage from a logistical system you are familiar with. 2. Discuss and illustrate the economic justification for establishing a warehouse. 3. Why would a warehouse be d ...

1 in talking to brad you mentioned the increasing threat of

1. In talking to Brad, you mentioned the increasing threat of identity theft. Brad seems concerned and after asking him several questions, you determine the following: a. For convenience, Brad has his driver's license nu ...

Ai enterprises is a computer corporation and its present

AI Enterprises is a computer corporation and its present sources of funds are $20,000,000 in equity capital and $8,000,000 in preferred stock. The company wants to fund some of its future projects (estimated cost: $12,00 ...

1 define the following margin account margin requirement

1. Define the following: margin account, margin requirement, and marking to market. 2. Why did futures markets originate in agricultural markets? Would a farmer buy or sell futures contracts? What would a farmer hope to ...

1 researchers who use group designs replicate their

1. Researchers who use group designs replicate their findings by repeating the same (or a similar) experiment on other samples of participants. How do single-case researchers replicate their findings? 2. What is the rati ...

Below is a grammar for expressions involving operator and

Below is a grammar for expressions involving operator + and integer or oating-point operands. Floating-point numbers are distinguished by having a decimal point. a) Give an SDD to determine the type of each term T and ex ...

1 in what way is the npv consistent with the principle of

1. In what way is the NPV consistent with the principle of shareholder wealth maximization? What happens to the value of a firm if a positive NPV project is accepted? If a negative NPV project is accepted? 2. Can you nam ...

1 discuss the conditions where a multidomestic or regional

1. Discuss the conditions where a multidomestic or regional strategy might perform better than a transnational or international strategy. 2. Explain how global integration and local responsiveness might be successful in ...

1 why is motor carrier freight transportation the most

1. Why is motor carrier freight transportation the most preferred method of product shipment? 2. What is the economic justification for the recent rapid growth of premium package services? 3. Why is it important for a lo ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro