Question
Katz is a capital development company that has 52,000 shares outstanding at a market price of $32 per share. The company's earnings before interest and
Katz is a capital development company that has 52,000 shares outstanding at a market price of $32 per share. The company's earnings before interest and taxes are $46,000. Katz has decided to issue $176,000 of debt at a rate of 8 percent and use the proceeds to buy back shares. What should Leslie do if she owns 500 shares of Katz and wants to use homemade leverage to offset the company's assumed leverage?
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Principles Of Managerial Finance
Authors: Lawrence J. Gitman, Chad J. Zutter
13th Edition
9780132738729, 136119468, 132738724, 978-0136119463
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