Corporate income taxes may be __________ than personal.

Residency tests are generally permissible in private industries

Indicate whether the statement is true or false

Slurp Cola Inc is all equity financed and generates perpetual annual EBIT of $600. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year

Assume that Slurp has a 100% payout rate, 1,000 shares outstanding, and that shareholders require a return of 6%. Assume that the tax rate is 0%. Slurp Cola Inc is considering an open market stock repurchase. It plans to buy 20% of its outstanding shares at the price of $10.00 per share. The repurchased shares will be cancelled. It will finance the repurchase by issuing perpetual bonds with a coupon rate (and yield) of 4%. Assume that the tax rate is 0%. If Slurp goes ahead with the repurchase, then what is the stock price after the repurchase is complete? A) $9.50 B) $10.00 C) $10.50 D) $11.00 E) $11.50