Examlex

Solved

Use the Information for the Question(s)below

question 11

Multiple Choice

Use the information for the question(s) below.
Assume that Rose Corporation's (RC) EBIT is not expected to grow in the future and that all earnings are paid out as dividends.RC is currently an all-equity firm.It expects to generate earnings before interest and taxes (EBIT) of $6 million over the next year.Currently RC has 5 million shares outstanding and its stock is trading for a price of $12.00 per share.RC is considering borrowing $12 million at a rate of 6% and using the proceeds to repurchase shares at the current price of $12.00.
-Following the borrowing of $12 million and subsequent share repurchase,the number of shares that RC will have outstanding is closest to:


Definitions:

Alcohol

A psychoactive substance found in drinks such as beer, wine, and spirits, known for its depressant effect on the central nervous system.

Live Longer

A term referring to the action or phenomenon of having a lifespan that exceeds the average expectancy, often associated with healthy lifestyles and medical advances.

Oxygen

A chemical element with symbol O and atomic number 8, essential for most life forms on Earth through processes like respiration.

Blood

A vital fluid in humans and animals that delivers necessary substances such as nutrients and oxygen to the cells and transports metabolic waste products away.

Related Questions