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Cyberdyne Systems generates perpetual annual EBIT of $200. (Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year.) Cyberdyne has 1,000 shares outstanding which trade for $1.33. The stockholders of Cyberdyne require a return of 996. Assume that Cyberdyne is initially all-equity financed. It is considering an open market stock repurchase. It plans to buy 20% of its outstanding shares. The repurchased shares will be cancelled. It will finance the repurchase by issuing perpetual bonds with a coupon rate (and yield) of 3%. Assume that the tax rate is 40%. Q 1 . What price does Cyberdyne have to offer for repurchased shares such that the repurchase price is equal to the price that prevails after the repurchase is complete? Q 2 - What is the price per share for Cyberdyne stock prior to the repurchase? Q 3 What is the cost of the repurchased shares? (This is the amount of money that Cyberdyne will borrow ) Q 4 - If Cyberdyne goes ahead with the repurchase, then what is the value of the company after the repurchase is complete Q 5 - What is the stock price after the repurchase is complete? Cyberdyne Systems generates perpetual annual EBIT of $200. (Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year.) Cyberdyne has 1,000 shares outstanding which trade for $1.33. The stockholders of Cyberdyne require a return of 996. Assume that Cyberdyne is initially all-equity financed. It is considering an open market stock repurchase. It plans to buy 20% of its outstanding shares. The repurchased shares will be cancelled. It will finance the repurchase by issuing perpetual bonds with a coupon rate (and yield) of 3%. Assume that the tax rate is 40%. Q 1 . What price does Cyberdyne have to offer for repurchased shares such that the repurchase price is equal to the price that prevails after the repurchase is complete? Q 2 - What is the price per share for Cyberdyne stock prior to the repurchase? Q 3 What is the cost of the repurchased shares? (This is the amount of money that Cyberdyne will borrow ) Q 4 - If Cyberdyne goes ahead with the repurchase, then what is the value of the company after the repurchase is complete Q 5 - What is the stock price after the repurchase is complete

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