The Green Briar Is an All-Equity Firm with a Total

Multiple Choice

The Green Briar is an all-equity firm with a total market value of $418,000 and 20,000 shares of stock outstanding. Management is considering issuing $120,000 of debt at an interest rate of 9 percent and using the proceeds on a stock repurchase. Ignore taxes. How many shares will the firm repurchase if it issues the debt securities?

A) 2,871 shares
B) 3,516 shares
C) 3,921 shares
D) 4,607 shares
E) 5,742 shares