KMS Corporation has assets with a market value of $422 million, $36 million of which are cash.
Question:
KMS Corporation has assets with a market value of $422 million, $36 million of which are cash. It has debt of $186 million and 18 million shares outstanding. Assume perfect capital markets.
a. What is its current stock price?
b. If KMS distributes $36 million as a dividend, what will its share price be after the dividend is paid?
c. If instead, KMS distributes $36 million as a share repurchase, what will its share price be once the shares are repurchased?
d. What will its new market debt-equity ratio be after either transaction?
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Related Book For 
Corporate Finance The Core
ISBN: 9781292158334
4th Global Edition
Authors: Jonathan Berk, Peter DeMarzo
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