Based on the Data in the Previous Two Problems, What

Multiple Choice

Based on the data in the previous two problems, what would the stock price be if VF issued the new debt and immediately used the proceeds to repurchase stock?

A) $49.43
B) $50.70
C) $52.00
D) $53.33
E) $56.00
(The following data apply to Problems 66, 67, and 68. The problems MUST be kept together, and they cannot be changed algorithmically.)
Barnes Baskets, Inc. (BB) currently has zero debt. Its earnings before interest and taxes (EBIT) are $100,000, and it is a zero growth company. BB's current cost of equity is 13%, and its tax rate is 40%. The firm has 20,000 shares of common stock outstanding selling at a price per share of $23.08.