Baruk Industries has no cash and a debt obligation of $31 million that is now due. The
Question:
Baruk Industries has no cash and a debt obligation of $31 million that is now due. The market value ofBaruk's assets is $70 million, and the firm has no other liabilities. Assume perfect capital markets.
a. Suppose Baruk has 16 million shares outstanding. What isBaruk's current shareprice?
If Baruk has 16 million sharesoutstanding, the current share price is $............... (Round to the nearestcent.)
b. How many new shares must Baruk issue to raise the capital needed to pay its debtobligation?
The number of new shares is ................. million. (Round to one decimalplace.)
c. After repaying thedebt, what willBaruk's share pricebe?
After repaying thedebt, the share price is $.................. (Round to the nearestcent.)
Corporate Finance The Core
ISBN: 9781292158334
4th Global Edition
Authors: Jonathan Berk, Peter DeMarzo