Now, solving for the price per share may seem impossible, because we are dealing with two unknowns—share price and change in the number of shares:
Share price = Total market value of equity (Original shares - Repurchased shares)
But by rewriting the equation, we can put it in a form that can be solved:
Share price = Total market value of equity + Cash paid out Number of original shares
Referring to the results of problem 2, let's assume that all the new debt is equal to the cash paid to repurchase shares. Please complete the following table: 0% Debt 25%Debt 50% Debt 100% Equity 75% Equity 50% Equity
Total market value of equity $ 10.000 $ 8.350 $ 6.700
Cash paid out $ - $ 2.500 $ 5.000
Number of original shares 1000 1000 1000
Total value per share $ 10,00 $ 10,85 $ 11,70