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

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