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Finco has an expected perpetual EBIT = $4,000. The unlevered cost of capital = 15% and there are 20,000 shares of stock outstanding. The cost
- Finco has an expected perpetual EBIT = $4,000. The unlevered cost of capital = 15% and there are 20,000 shares of stock outstanding. The cost of debt = 10%. There are no flotation costs. Assume a stockholder prefers a debt/equity ratio = 1.0. How could the stockholder use homemade leverage to achieve the restructuring without the help of Finco? Assume there are no taxes.A.The stockholder should borrow $1,330 to buy more shares.
- B.The stockholder should borrow $2,660 and uses $1330 of own money to buy 3,000 shares
- C.The stockholder should borrow $2660 to buy 1,000 shares
- D.The stockholder should borrow $1,330 and uses $1330 of own money to buy 2,000 shares
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The Legal Environment Of Business
Authors: Nancy Kubasek
7th Edition
013354642X, 9780133546422
