Use the Information for the Question(s)below

question 5

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.
-How many shares will KD repurchase in the recapitalization if the share price increases upon announcement and before the recapitalization?

• A)12.54 million shares
• B)8.96 million shares
• C)3.65 million shares
• D)9.35 million shares

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Definitions:

Attention-Deficit/Hyperactivity Disorder

A neurodevelopmental disorder characterized by a pattern of inattention and/or hyperactivity-impulsivity that interferes with functioning or development.

Childhood Schizophrenia

A rare and severe form of schizophrenia that manifests in children, characterized by hallucinations, delusions, and cognitive difficulties.

Equifinality

The principle that a given end state can be reached by many potential means and through different paths, often used in systems theory.

Psychopathology

The study of mental disorders, including their symptoms, causes, and treatment.