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Lil John Industries' equity is currently selling for $55 per share and there are 2.8 million shares outstanding. The firm also has 33,000 bonds outstanding,
Lil John Industries' equity is currently selling for $55 per share and there are 2.8 million shares outstanding. The firm also has 33,000 bonds outstanding, which are selling at 109 percent of par. Suppose that Lil John is considering an active change to its capital structure so that the firm would have a D/E of 1.2. Which type of security (stocks or bonds) would Lil John need to sell to accomplish this, and how much would it have to sell
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