Now Assume That BB Is Considering Changing from Its Original

Multiple Choice

Now assume that BB is considering changing from its original capital structure to a new capital structure with 45% debt and 55% equity. This results in a weighted average cost of capital equal to 10.4% and a new value of operations of $576,923. Assume BB raises $259,615 in new debt and purchases T-bills to hold until it makes the stock repurchase. BB then sells the T-bills and uses the proceeds to repurchase stock. How many shares remain after the repurchase, and what is the stock price per share immediately after the repurchase?

A) 11,001;
$28) 85
B) 12,711;
$35) 62
C) 13,901;
$42) 57
D) 15,220;
$54) 31
E) 17,105;
$89) 67
(The following data apply to Problems 69, 70, 71, and 72. The problems MUST be kept together, and they cannot be changed algorithmically.)
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%. Its earnings before interest and taxes (EBIT) are $100,000, and it is a zero growth company. AJC's current cost of equity is 8.8%, and its tax rate is 40%. The firm has 10,000 shares of common stock outstanding selling at a price per share of $60.00.