Test of Delineament

Based on the financial analysis, the firm should borrow at least $50 million to repurchase 14 million shares of stock. According to a Harvard business review, it would not be rational for a public company to be funded only by equity. It's too inefficient. Debt is a lower cost source of funds and allows a higher return to the equity investors by leveraging their money. In addition, the U.S. government encourages companies to borrow money by allowing them to deduct the interest paid on the debt from their corporate income taxes. With an increase of future corporate tax break of 34% (new tax break is 40%), it would be beneficial for the firm to deduct interest payments to pay fewer taxes. I will present two scenarios, the first one is to borrow $50 million to buy 14 million shares, and the second is to borrow $100 to buy 261,702,702 shares of stock Based on the financial analysis, the firm should borrow at least $50 million to repurchase 14 million shares of stock. According to a Harvard business review, it would not be rational for a public company to be funded only by equity. It's too inefficient. Debt is a lower cost source of funds and allows a higher return to the equity investors by leveraging their money. In addition, the U.S. government encourages companies to borrow money by allowing them to deduct the interest paid on the debt from their corporate income taxes. With an increase of future corporate tax break of 34% (new tax break is 40%), it would be beneficial for the firm to deduct interest payments to pay fewer taxes. I will present two scenarios, the first one is to borrow $50 million to buy 14 million shares, and the second is to borrow $100 to buy 261,702,702 shares of stock

...