Assume That BB Is Considering Changing from Its Original Capital

question 9

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.BB then sells the T-bills and uses the proceeds to repurchase stock.How many shares remain after the repurchase, and what is the stock price per share immediately after the repurchase?

• A)11,001; $28.85
• B)12,711; $35.62
• C)13,901; $42.57
• D)15,220; $54.31
• E)17,105; $89.67

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Definitions:

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