The JumpStart Corporation Is Unlevered and Valued at $500,000

question 33

Essay

The JumpStart Corporation is unlevered and valued at $500,000. JumpStart has 200,000 shares outstanding. The company announces that in the near future it will issue $200,000 of debt and buy back $200,000 of stock. If the firm is in the 34% tax bracket, how many shares of stock will be repurchased?

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Definitions:

Angular Rocks

Rocks with sharp edges and points, often resulting from the breaking and fracturing of harder rocks without significant weathering or rounding.

Bedrock

The solid rock layer beneath surface soils or sediments, forming the earth's crust's foundation.

Moved Downhill

The process of material, such as soil, rock, or snow, moving down a slope due to gravity, often accelerated by factors like water saturation or earthquakes.

High Percentage

Refers to a substantial or large proportion of a mix, group, or total.