Question
Question 2 (20 points): Victor owns 2,092shares of Maliwan Corporation. Maliwan is currently 100% equity, and has an EBIT of $410,740, and 114,856 shares outstanding.
Question 2 (20 points): Victor owns 2,092shares of Maliwan Corporation. Maliwan is currently 100% equity, and has an EBIT of $410,740, and 114,856 shares outstanding. Maliwan is moving to a 53% debt capital structure, and Victor wishes they would stay all equity. The risk free rate is 3.8%, and their share price is $60. You may assume that the Modigliani-Miller model holds, and that there are no taxes. How many shares of Maliwan would Victor have to buy or sell in order to offset the effects of Maliwan's capital structure changes on his portfolio? Please round your answer to the nearest share, and represent buying shares with positive numbers and selling shares with negative numbers.
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