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Firm ABC issued 1 billion dollars in bonds to fund a share repurchase program. Assume that the share price before is $34...

Firm ABC issued 1 billion dollars in bonds to fund a share repurchase program. Assume that the share price before is $34.88 and that there are 185.5 million shares outstanding before the new bond issue. What is the share price at which UST will conduct the share repurchase?

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Answer #1

Required share price = (Proceeds from the bonds / Outstanding shares) + $34.88

                                    = ($1,000 million / 185.5 million) + $34.88

                                    = $5.39 + $34.88

                                    = $40.27

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