A pulp and paper company is evaluating whether it should retain the current bleaching process that uses chlorine dioxide or replace it with a proprietary oxypure process. Should the project proceed, the company need to alter its capital structure which currently consist of all equity.

The following information applies to the company: Operating income (EBIT) $300,000 Shares outstanding 120,000 Debt $100,000 Total Assets $208800 Interest expense $ 10,000 Tax rate 40%

The company is considering a recapitalization where it would issue $348,000 worth of new debt and use the proceeds to buy back $348,000 worth of common stock. The buyback will be undertaken at the pre-recapitalization share price. The recapitalization is not expected to have an effect on operating income or the tax rate. After the recapitalization, the companys interest expense will be $50,000. Assume that the recapitalization has no effect on the companys P/E ratio. What is the companys expected stock price following the recapitalization?