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Ketchup Corporation is currently trading at $40 per share. There are 0.5 million shares outstanding, and the company has no debt. You believe that the
Ketchup Corporation is currently trading at $40 per share. There are 0.5 million shares outstanding, and the company has no debt. You believe that the value of the company would increase by 20% over 1 year if the management were replaced. How much would you gain from acquiring 60% of Ketchup's shares by getting a 1-year, 10%-interest loan? Hint: you are not using your own money. The money for the investment comes from the loan.
$4,000,000.
$0.
$2,400,000.
$1,320,000.
$1,200,000.
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