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Green Lake Corp. has 10 million shares outstanding with a market price of $25 per share...

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Finance

Green Lake Corp. has 10 million shares outstanding with a marketprice of $25 per share and no debt. The company marginal tax rateis 40%. The CFO of Green Lake plans to issue a $100 million debtand use the proceeds to repurchase the outstanding shares. Assumethat Green Lake prepares to repurchase the existing shares from theopen market at $25 per share. What will the new share price beafter the repurchase?

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Green Lake Corp. has 10 million shares outstanding with a marketprice of $25 per share and no debt. The company marginal tax rateis 40%. The CFO of Green Lake plans to issue a $100 million debtand use the proceeds to repurchase the outstanding shares. Assumethat Green Lake prepares to repurchase the existing shares from theopen market at $25 per share. What will the new share price beafter the repurchase?

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