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Author Question: Reefer Trucking Inc. is expected to generate EBIT of $6 million annually in perpetuity (starting in ... (Read 13 times)

darbym82

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on: Apr 25, 2021
Reefer Trucking Inc. is expected to generate EBIT of $6 million annually in perpetuity (starting in one year). Reefer is all equity financed, there are 2 million shares outstanding and shareholders require a return of 9%. The corporate tax rate is 35%. Reefer is proposing to issue $5 million of perpetual bonds with an annual coupon of 6%. The company uses the $5M of debt to repurchase stock. Assume that, after borrowing the $5M, Reefer never increases or decreases its debts. What price should Reefer offer to repurchase shares such that the post-repurchase price is equal to the repurchase price?
◦ $21.74
◦ $22.14
◦ $22.54
◦ $22.74
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Marked as best answer by darbym82 on Apr 25, 2021

Brenm

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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.
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darbym82

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Reply 2 on: Apr 25, 2021
Thanks for the timely response, appreciate it

coreycathey

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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