Assume That BB Is Considering Changing from Its Original Capital

question 6

Multiple Choice

assume that BB is considering changing from its original capital structure to a new capital structure with 45% debt and 55% equity.This results in a weighted average cost of capital equal to 10.4% and a new value of operations of $576,923.Assume BB raises $259,615 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)$14.42
• B)$19.36
• C)$23.91
• D)$28.85
• E)$35.62

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Definitions:

Normally Closed

A term used to describe a switch or circuit condition where the default state is closed, allowing current to flow unless actuated to open.

Normally Closed

Refers to an electrical switch or relay configuration where the contacts are in a closed position, allowing current flow, when no actuating force is applied.

Inhibit

To prevent or restrict a particular action or operation, often used in the context of control systems.

Enable

To make something operational or to grant the authority or means to do something.