The Christmas Tree Farms,Inc

Multiple Choice

The Christmas Tree Farms,Inc.currently has 45,000 shares of stock outstanding and no debt.The price per share is $17.50.The firm is considering borrowing funds at 7.5 percent interest and using the proceeds to repurchase 4,000 shares of stock.Ignore taxes.How much is the firm borrowing?

A) $52,500
B) $70,000
C) $110,500
D) $125,000
E) $140,000