Question: Wolverine Corp. currently has 5 , 0 0 0 , 0 0 0 in equity outstanding and 1 , 0 0 0 , 0 0

Wolverine Corp. currently has 5,000,000 in equity outstanding and 1,000,000 in debt outstanding. The firm currently has 500,000 shares of common stock outstanding. The firm is contemplating issuing an additional 1,000,000 in debt and using the proceeds to repurchase shares. The corporate tax rate is 40%. Assume perfect markets except for the above corporate taxes.
What will the firm's stock price be the moment after the firm announces its refinancing plan?

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