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Question-4: BBB is a clothing retailer with a current share price of $10.00 and with 25...

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Finance

Question-4: BBB is a clothing retailer with a current shareprice of $10.00 and with 25 million shares outstanding. Supposethat BBB announces plans to lower its corporate taxes by borrowing$100 million and using the proceeds to repurchase shares. Supposethat BBB pays corporate taxes of 35% and shareholders expect thechange in debt to be permanent. Assuming that capital markets areperfect except for the existence of corporate taxes, what should bethe number of shares outstanding after the share repurchase? YOURSOLUTION: ?

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