Refer to Exhibit 15

Refer to Exhibit 15.1.Assume that PP is considering changing from its original capital structure to a new capital structure with 35% debt and 65% equity.This results in a weighted average cost of capital equal to 9.4% and a new value of operations of $510, 638.Assume PP raises $178, 723 in new debt and purchases T-bills to hold until it makes the stock repurchase.PP then sells the T-bills and uses the proceeds to repurchase stock.How many shares remain after the repurchase, and what is the stock price per share immediately after the repurchase?

A) 7, 500; $71.49
B) 7, 000; $59.57
C) 6, 500; $51.06
D) 6, 649; $53.33
E) 6, 959; $58.78

Correct Answer:

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