Florence Mills Is an All-Equity Firm with a Total Market

Multiple Choice

Florence Mills is an all-equity firm with a total market value of $250,000.The firm has 8,000 shares of stock outstanding.Management is considering issuing $50,000 of debt at an interest rate of 7 percent and using the proceeds on a stock repurchase.Ignore taxes.How many shares can the firm repurchase if it issues the debt securities?

A) 1,600 shares
B) 1,618 shares
C) 1,647 shares
D) 1,656 shares
E) 1,699 shares