Next you show Benjamin the impact of the investment bankers share repurchase proposal: the company could raise $10 billion new debt at the current rate of 2.1% to repurchase its own shares. Current share price 114.33.

Question 5. Compute the market value of the equity, the share price, and the number of shares outstanding, at the time of the announcement for the repurchase and after the repurchase is complete, respectively (assume no arbitraging).

Net income (000s) Average number of shares outstanding (000s) Effective corporate tax rate Average cost of bonds 31/12/2019 8,248,000 1,267,881 36.50% 2.1%