Kappa is an all-equity firm. It has 120,000 shares outstanding, currently worth £20 per share. The unlevered cost of equity is 20%. The firm has decided to issue £1,000,000 of 8% debt, and to use the proceeds to repurchase shares. Assume a 28% corporate tax rate.

What is the value of a share after the capital structure change?

Answer rating: 100% (QA)

To calculate the value of a share after the capital structure change we need to determine th... View the full answer