Refer to Exhibit 15

question 43

Multiple Choice

Refer to Exhibit 15.1.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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Definitions:

Clinton Kelly

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Interpersonal Relations

The interactions and social connections that occur between individuals in a personal or professional context.

Tell and Sell

A communication approach where the speaker informs the audience about something and then tries to convince them of its value or importance.