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Suppose Pestco, Inc., a profitable pest management firm, has 625 million shares outstanding with a share price of $80, and $25 billion in debt. If
Suppose Pestco, Inc., a profitable pest management firm, has 625 million shares outstanding with a share price of $80, and $25 billion in debt. If in three years, Pestco has 800 million shares outstanding trading for $100 per share, how much debt will Pestco have if it maintains a constant debt-equity ratio (D/E)?
a. | $40 billion | |
b. | $4 billion | |
c. | $160 billion | |
d. | $20 billion |
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