Shares of common stock outstanding stock

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Company - entirely equity financed 18 million shares of common stock outstanding Stock = $37.50 per share Wants to purchase land for $105 million. Purchase will increase company's annual pretax earnings by $21.5 million in perpetuity. Company's current cost of capital is 10.5% Company can issue bonds at par value with a 7% coupon rate Capital structure in the range of 70% equity/30% debt is optimal. Company is 40% corporate tax rate. If company issues equity to finance purchase, what is NPV? what is market value balance sheet after purchase is financed with equity? What is price per share of stock (after) and how many shares will need to be issued? If company decides to issue debt to finance purchase: what will market value be? What would market value balance sheet be?

Reference no: EM131054548

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