Assume That PP Is Considering Changing from Its Original Capital

question 42

Multiple Choice

assume that PP is considering changing from its original capital structure to a new capital structure with 35% debt and 65% equity.This results in a weighted average cost of capital equal to 9.4% and a new value of operations of $510,638.Assume PP raises $178,723 in new debt and purchases T-bills to hold until it makes the stock repurchase.What is the stock price per share immediately after issuing the debt but prior to the repurchase?

• A)$45.90
• B)$48.12
• C)$51.06
• D)$53.33
• E)$58.75

---

Definitions:

Primary Reaction

In psychology, this refers to an infant's instinctive responses to stimuli, such as sucking or grasping.

Built-In Fear

An innate or instinctive fear response, often to specific stimuli, that is considered to be a survival mechanism passed down through evolution.

Autonomic Arousal

Autonomic arousal refers to the activation of the autonomic nervous system, affecting physiological states such as heart rate and sweating in response to stimuli.

Cognitive Interpretation

The process of making sense of perceptions, sensations, and experiences through mental processing, often involving assigning meaning and integrating new information with existing knowledge.