Photronics, Inc has the following fact pattern: Share Price = $17.00 Net Income =...

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Photronics, Inc has the following fact pattern: Share Price = $17.00 ● ● Net Income = $24.3 million; Tax rate = 30% 10 million shares outstanding Earnings-per-share = $2.43 Value of Photronics Inc. as an unlevered firm = $170 million Proposed Market Based Leverage immediately following stock repurchase = 45%; cost of debt (Kd) = 6% Required: How much debt should be issued to support the 45% Debt/Value target ratio What is the new market value of Photronics's equity How many shares may be purchased and at what price per share? What is new the earnings-per-share resulting from the share repurchase Photronics, Inc has the following fact pattern: Share Price = $17.00 ● ● Net Income = $24.3 million; Tax rate = 30% 10 million shares outstanding Earnings-per-share = $2.43 Value of Photronics Inc. as an unlevered firm = $170 million Proposed Market Based Leverage immediately following stock repurchase = 45%; cost of debt (Kd) = 6% Required: How much debt should be issued to support the 45% Debt/Value target ratio What is the new market value of Photronics's equity How many shares may be purchased and at what price per share? What is new the earnings-per-share resulting from the share repurchase

Answer rating: 100% (QA)

1 How much debt should be issued to support the 45 DebtValue target ratio 170 million ... View the full answer