Belo Horizonte Company plans to buy back 1.5 million shares of its own stock from...
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Accounting
Belo Horizonte Company plans to buy back 1.5 million shares of its own stock from its cash reserves at $65 a share. There will be no change in the debt of the company. This will increase the bankruptcy costs by $13 million, due to lower cash reserves of the company. Due to share buyback, the debt/assets ratio will go from 33% to 37%. The income tax rate of the company is 30%.
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