Firm ABC currently has zero debt. Its free cash flow last y…
Firm ABC currently has zero debt. Its free cash flow last year was $48,000, and it is a zero growth company. ABC’s current cost of equity is 10%, and its tax rate is 40%. The firm has 10,000 shares of common stock outstanding selling at a price per share of $48.00. Assume that ABC is considering changing from its original capital structure to a new capital structure that results in a weighted average cost of capital equal to 9.4% and a new enterprise value of $510,638. Assume ABC raises $178,723 in new debt and uses the proceeds to repurchase stock. How many shares remain after the repurchase, and what is the stock price per share immediately after the repurchase?