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55. rue-eve Deltona, USA is a development company,r that currently is financed with 100 percent equity. There are 20,000 shares outstanding at a market price

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55. rue-eve Deltona, USA is a development company,r that currently is financed with 100 percent equity. There are 20,000 shares outstanding at a market price of $50 a share. The dividend payout ratio is 100 percent. Deltona has earnings before interest and taxes {EBIT} of $50,000. Ignore taxes. The rm has decided to issue $200,000 of debt at a rate of 5 percent and use the proceeds to repurchase shares. Scott owns 100 shares of Deltona and decided to continue holding them. By undoing the leverage, Scott will receive annual income of: $267 from dividends and $133 from interest. $150 from dividends and $150 from interest. $300 from interest. $250 from dividends and $50 from interest. $300 from dividends

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