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5. You currently own 500 shares in K&S Stores. K&S is currently an all equity firm that has 25,000 shares of stock outstanding at a

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5. You currently own 500 shares in K\&S Stores. K\&S is currently an all equity firm that has 25,000 shares of stock outstanding at a market price of $10 a share. The company's earnings before interest and taxes is $20,000. K\&S has decided to issue $150,000 of debt at a 6 percent rate of interest. This $150,000 will be used to repurchase shares of stock. How many shares of K\&S stock must you sell to unlever your position if you can loan out funds at a 6 percent rate of interest? a. 150 shares b. 200 shares c. 250 shares d. 300 shares e. 500 shares

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