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SOLVED:Mercer Corp. is an all equity firm with 10 million shares outstanding and 100 million worth of debt outstanding. Its current share price is 75. Mercer's equity cost of capital is 8.5 %. Mercer has just announced that it will issue 350 million worth of debt. It will use the proceeds from this debt to pay off its exiscing debt, and use the remaining 250 million to pay an immediate dividend. Assume perfect capital markets. a. Estimate Mercer's share price just after the recapitalization
SOLVED:Mercer Corp. is an all equity firm with 10 million shares …
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