Use the following data for Problems 12-16. The A. J. Croft Company (AJC) currently has $200,000 market value (and book value) of perpetual debt outstanding carrying a coupon rate of 6 percent. The company is a zero-growth company. AJC's current cost of equity is 8.775 percent, and its tax rate is 35 percent. The firm has 12,000 shares of common stock outstanding selling at a price per share of $50.00.

1) Now assume that AJC is considering changing from its original capital structure to a new capital structure that results in a stock price of $52.50 per share. The resulting capital structure would have a $503,450 total market value of equity and $326,550 market value of debt. How many shares would AJC repurchase in the recapitalization? (Hint: use the lecture slides to do the next step: share price after repurchase.)

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