The remaining number of shares outstanding

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Reference no: EM131520543

1. You issue $1,000,000 of debt and use the proceeds to repurchase equity. You originally had $100,000 shares of stock. The old stock price was $40 per share and the new stock price is $50 per share. The remaining number of shares outstanding is:

A. 75,000

B. 80,000

C. 125,000

D. 120,000

2. If a firm issues debt, uses the proceeds to repurchase equity, and replaces old debt:

A. old bondholders are hurt

B. remaining shareholders get stock worth the new price and shareholders who sell their stock back get the old price

C. a change that increases the Value of the firm will also increase WACC

D. all shareholders, including those who sell, get the new stock price

Reference no: EM131520543

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