Wayne's Whirled is a company which manufactures high-end hair gel. The firm has 4,000 shares of...

 

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Wayne's Whirled is a company which manufactures high-end hair gel. The firm has 4,000 shares of stock each priced at $21 and it also has $100,000 of perpetual debt. The YTM on the debt is 8%, and the debt trades at par. Wayne, the CEO, has been getting a bit nervous because in the current environment business prospects have thinned. As such, he has decided to reduce the amount of debt they have. The firm has decided that it will issue equity and repurchase $35,000 of debt. The firm faces a 25% tax rate. Assume that the firm's announcement about issuing equity to repurchase debt is both credible and a surprise to the market. After the equity issuance, how many shares of stock will Wayne's Whirled have outstanding Enter your answer without comma(s) to the nearest share. If your answer is 3,456.78 shares please enter 3457). If there is not enough information to determine the answer, enter -99 (negative ninety-nine) as your answer. Wayne's Whirled is a company which manufactures high-end hair gel. The firm has 4,000 shares of stock each priced at $21 and it also has $100,000 of perpetual debt. The YTM on the debt is 8%, and the debt trades at par. Wayne, the CEO, has been getting a bit nervous because in the current environment business prospects have thinned. As such, he has decided to reduce the amount of debt they have. The firm has decided that it will issue equity and repurchase $35,000 of debt. The firm faces a 25% tax rate. Assume that the firm's announcement about issuing equity to repurchase debt is both credible and a surprise to the market. After the equity issuance, how many shares of stock will Wayne's Whirled have outstanding Enter your answer without comma(s) to the nearest share. If your answer is 3,456.78 shares please enter 3457). If there is not enough information to determine the answer, enter -99 (negative ninety-nine) as your answer.

Answer rating: 100% (QA)

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