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Please solve for all the parts of the question and I will rate your answer with a thumbs up. Thank you! Q9- RK Industries has
Please solve for all the parts of the question and I will rate your answer with a thumbs up. Thank you!
Q9- RK Industries has 50 million shares outstanding and a market capitalization of $1.25 billion. It also has $750 million in debt outstanding. RK Industries has decided to delever the firm by issuing new equity and completely repaying all the outstanding debt. The cost of borrowing or lending is 0%. Assume perfect capital markets. 1. How many shares RK Industries must issue? (5 pts.) 2. Mr. Jason is holding 100 shares of RK Industries. Mr. Jason disagrees with the above way of getting rid of the RK Industries debt. Suppose Mr. Jason wants to undo the effect of such restructuring. Help Mr. Jason to choose among one of the following options. Please clearly indicate the correct answer. (10 pts.) 3 1. selling 32 shares of stock and lending $800. 2. borrowing $1500 and buying 60 shares of stock. 3. borrowing $1000 and buying 40 shares of stock. 4. selling 40 shares of stock and lending $1000. Q9- RK Industries has 50 million shares outstanding and a market capitalization of $1.25 billion. It also has $750 million in debt outstanding. RK Industries has decided to delever the firm by issuing new equity and completely repaying all the outstanding debt. The cost of borrowing or lending is 0%. Assume perfect capital markets. 1. How many shares RK Industries must issue? (5 pts.) 2. Mr. Jason is holding 100 shares of RK Industries. Mr. Jason disagrees with the above way of getting rid of the RK Industries debt. Suppose Mr. Jason wants to undo the effect of such restructuring. Help Mr. Jason to choose among one of the following options. Please clearly indicate the correct answer. (10 pts.) 3 1. selling 32 shares of stock and lending $800. 2. borrowing $1500 and buying 60 shares of stock. 3. borrowing $1000 and buying 40 shares of stock. 4. selling 40 shares of stock and lending $1000Step by Step Solution
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