Answer:
The value of the firm is $1,773,333
Explanation:
Calculation of Value of each share
Amount borrowed (A) $245,000
No. of shares repurchased (B) 21,000
Value for each share (C) $11.67
No. of shares outstanding after repurchase(A) 131,000
(152,000 - 21,000)
Value for each share(B) $11.67
Equity value after repurchase(A*B) $1,528,333
Add: Amount borrowed $245,000
Firm value after this transaction $1,773,333
