Lil John Industries' equity is currently selling for $46 per share and there are 2.1 million shares
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Lil John Industries' equity is currently selling for $46 per share and there are 2.1 million shares outstanding. The firm also has 38,000 bonds outstanding, which are selling at 113 percent of par. Suppose that Lil John is considering an active change to its capital structure so that the firm would have a D/E of 1.3. Required: Which type of security (stocks or bonds) would Lil John need to sell to accomplish this, and how much would it have to sell? (Enter your answer in dollars not in millions. Omit the "$" sign in your response.)
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a...
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Finance Applications and Theory
ISBN: 978-0077861681
3rd edition
Authors: Marcia Cornett, Troy Adair
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