Background Info:
Company - Mallard Corp.
Type = Zero-growth firm
Debt = Carries a market value debt of $1,000,000 carrying a coupon rate of 10%
EBIT total = $400,000
Current cost of capital = 15%
Corporate tax rate = 35%
Common stock outstanding = 100,000
A.Current total market value is?
B.Current stock price is?
C.Mallard recalls its debt above for repurchase, and reissues $ 1,200,000 in debt at a coupon rate of 12%. The required rate of return on equity will increase to 16%. Its new total market value will be?
D.The firm's new share price will be?