Dinder Mufflin is a Pennsylvania-based paper company. Dinder Mufflin i

Dinder Mufflin is a Pennsylvania-based paper company. Dinder Mufflin is all equity financed. Its shares are trading for $7.67 and it has 433 million shares outstanding.

The company has excess cash of $831.36 million that it wants to distribute using a fixed-price tender offer. It has announced that it will pay $9.60 per share and that it seeks to buy back 20% of outstanding shares. What will the stock price be after the repurchase?
A) $5.2083
B) $7.1875
C) $9.5875
D) $11.9875
E) $13.1875

ANSWER

B