However the companys suppliers are unhappy with the


BCD Manufacturing is considering repurchasing 40 percent of its common stock. Management estimates the tax savings from such a move to be $48 million, based on the addition of $1 billion of debt at a rate of 12 percent with a 40 percent marginal tax rate. However, the company's suppliers are unhappy with the decision and are threatening to revoke the company's net-30 day credit terms, which will cost the firm an additional 2 percent on its $1.5 billion inventory. Should management go ahead with the repurchase? Why or why not?

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: However the companys suppliers are unhappy with the
Reference No:- TGS02222505

Expected delivery within 24 Hours