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Shares of Modern Data are selling for $75 per share. There are three million shares outstanding. What will be the share price and the number of shares (respectively) if the company offers reverse stock splits of two-for-three? Ignore taxes.

Multiple Choice

a)$112.50; 3,000,000.

b)$50.00; 3,000,000.

c)$75.00; 3,000,000.

d)$50.00; 2,000,000.

e)$112.50; 2,000,000.

The capital structure of a company is composed of debt and equity as follows. Given the following information, what is the approximate weight of debt in the capital structure? The tax rate is %30.

	Equity	Debt
# of outstanding shares	100,000	-
Stock price (each)	$85	-
Expected dividend per share	$4	-
Dividend growth rate	3%	-
# of outstanding bonds	-	5,000
Coupon rate	-	5%
Bond price (each)	-	$950
Years to maturity	-	7

Multiple Choice

a)91%.

b)9%.

c)64%.

d)50%.

e)36%.