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EpiscoWhat EpiscoWhat
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7 years ago
Galt Industries has 125 million shares outstanding and has a marginal corporate tax rate of 35%. Galt announces that it will use $75 million in excess cash to repurchase shares. Shareholders had previously assumed that Galt would retain this excess cash permanently. The amount Galt's share price can be expected to change upon this announcement is closest to:
A) $0.21
B) $0.24
C) $0.36
D) $0.39
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
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#1
7 years ago
A
Explanation:  A) PV Tax shield =   =   
   = $20.25 million per share =   = $0.21
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