Question
Absolute Corporation currently has $60 million in liabilities and common equity in combination. The firm has no preferred stock. The CFO constructed the following table
Absolute Corporation currently has $60 million in liabilities and common equity in combination. The firm has no preferred stock. The CFO constructed the following table to show the CEO the effect of changing the firm's capital structure.
Amount of Debt in the Capital Structure Earnings per Share (EPS) Market Price per Share (P_(0))
$12,000,000 $3.00 $116.00
18,000,000 4.00 113.70
24,000,000 4.50 103.05
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Modern Equity Investing Strategies
Authors: Anatoly B Schmidt
1st Edition
9811239495, 978-9811239496
