Question: KMS Corporation has assets with a market value of $551 million, $40 million of which are cash. It has debt of $273 million, and 11

KMS Corporation has assets with a market value of $551 million, $40 million of which are cash. It has debt of $273 million, and 11 million shares outstanding. Assume perfect capital markets.

a. What is its current stockprice?

b. If KMS distributes $40 million as adividend, what will its share price be after the dividend ispaid?

c. Ifinstead, KMS distributes $40 million as a sharerepurchase, what will its share price be once the shares arerepurchased?

d. What will its new marketdebt-equity ratio be after eithertransaction?

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