Lee Manufacturing’s value of operations is equal to $900 million after a recapitalization. (The firm had no debt before the recap.) Lee raised $300 million innew debt and used this to buy back stock. Lee had no short-term investmentsbefore or after the recap. After the recap, wd = 1/3. The firm had 30 millionshares before the recap. What is P (the stock price after the recap)?
Lee Manufacturing’s value of operations is equal to $900 million after a recapitalization. (The firm had no debt before the recap.) Lee raised $300 million innew debt and used this to buy back stock. Lee had no short-term investmentsbefore or after the recap. After the recap, wd = 1/3. The firm had 30 millionshares before the recap. What is P (the stock price after the recap)?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Lee Manufacturing’s value of operations is equal to $900 million after a recapitalization. (The firm had no debt before the recap.) Lee raised $300 million in
new debt and used this to buy back stock. Lee had no short-term investments
before or after the recap. After the recap, wd = 1/3. The firm had 30 million
shares before the recap. What is P (the stock price after the recap)?
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