JKC Landscaping is an all equity firm that has 1,40,000 shares of stock outstanding. The company is in the process of borrowing Rs. 1.2 million at 8 percent interest to repurchase 30,000 shares of the outstanding stock. What is the value of this firm (in Rs.) if you ignore taxes?

Select one:

5.6 million

2.57 Million

7 Million

4.14 Million

Dear Student,

The company is worth 5.6 million or 56 lakh
Since the company is borrowing 1.2 million to repurchase 30000 shares. The value of each share becomes rs 40.
hence the value of the firm is 140000 shares multiplied by rs 40. 


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