This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Omnicorp is all equity financed and generates perpetual annual EBIT of $500. Assume that the EBIT, ... (Read 96 times)

laurencescou

  • Hero Member
  • *****
  • Posts: 593
on: Apr 25, 2021
Omnicorp is all equity financed and generates perpetual annual EBIT of $500. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. Omnicorp has 1,000 shares outstanding which trade for $3.125. The stockholders of Omnicorp require a return of 8%. Omnicorp is considering an open market stock repurchase. It plans to buy 20% of its outstanding shares. The repurchased shares will be cancelled. It will finance the repurchase by issuing perpetual bonds with a coupon rate (and yield) of 2%. Assume that the tax rate is 50%. What price does Omnicorp have to offer for repurchased shares such that the repurchase price is equal to the price that prevails after the repurchase is complete?
◦ $3.14
◦ $3.44
◦ $3.91
◦ $4.34
◦ $4.13
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
Buy Test-Bank


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by laurencescou on Apr 25, 2021

AISCAMPING

  • Sr. Member
  • ****
  • Posts: 347
Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
Answer Preview
Only 59% of students answer this correctly


laurencescou

  • Member
  • Posts: 593
Reply 2 on: Apr 25, 2021
YES! Correct, THANKS for helping me on my review

FergA

  • Member
  • Posts: 352
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

Thyroid conditions cause a higher risk of fibromyalgia and chronic fatigue syndrome.

Did you know?

Computer programs are available that crosscheck a new drug's possible trade name with all other trade names currently available. These programs detect dangerous similarities between names and alert the manufacturer of the drug.

Did you know?

Blastomycosis is often misdiagnosed, resulting in tragic outcomes. It is caused by a fungus living in moist soil, in wooded areas of the United States and Canada. If inhaled, the fungus can cause mild breathing problems that may worsen and cause serious illness and even death.

Did you know?

Today, nearly 8 out of 10 pregnant women living with HIV (about 1.1 million), receive antiretrovirals.

Did you know?

Alcohol acts as a diuretic. Eight ounces of water is needed to metabolize just 1 ounce of alcohol.

Annual Rings Annual Rings
Annual Federal Deficit (or Surplus), 1992–2016 Annual Federal Deficit (or Surplus), 1992–2016
Literacy and Gender Equity Literacy and Gender Equity
Efficiency vs. Equity Efficiency vs. Equity
Determine the nominal annual rate of interest of the following ordinary general annuity. Determine the nominal annual rate of interest of the following ordinary general annuity.
Life Table for an Annual Plant Cohort Life Table for an Annual Plant Cohort
Video: Primate Evolutionary Tree Animation

For a complete list of videos, visit our video library