Use the Information for the Question(s)below

question 58

Multiple Choice

Use the information for the question(s) below.
KD Industries has 30 million shares outstanding with a market price of $20 per share and no debt.KD has had consistently stable earnings,and pays a 21% tax rate.Management plans to borrow $200 million on a permanent basis through a leveraged recapitalization in which they would use the borrowed funds to repurchase outstanding shares.
-If KD can repurchase its existing shares at $20 per share,what will the new share price be after the transaction?

• A)$22.35
• B)$22.00
• C)$22.65
• D)$22.10

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Definitions:

Variability

The degree to which scores in a set of data are spread out or dispersed, indicating the diversity or difference in a group of observations.

Heritability

a statistic that indicates what proportion of the variation in a trait within a population can be attributed to genetic differences among individuals.

IQ Scores

Standardized measurements of a person's cognitive abilities and potential in comparison to a population.

Experimental Group

The group within an experiment that experiences the researcher’s manipulation of the independent variable.