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KMS Corporation has assets with a market value of 500 million 50 million of which are cash It has debt of 200 million and 10 million shares outstanding Assume perfect capital markets a What

KMS Corporation has assets with a market value of $500 million, $50 million of
which are cash. It has debt of $200 million, and 10 million shares outstanding.
Assume perfect capital markets.
a. What is its current stock price?
b. If KMS distributes $50 million as a dividend, what will its share price be after the
dividend is paid?
c. If instead, KMS distributes $50 million as a share repurchase, what will its share
price be once the shares are repurchased?
d. What will its new market debt-equity ratio be after either transaction? 

Apr 16 2021 View more View Less

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