Question
Wominjeka Inc. has 75 million shares outstanding with a market capitalization of $1.2 billion. The firm also has $400 million of debt in its capital
Wominjeka Inc. has 75 million shares outstanding with a market capitalization of $1.2 billion. The firm also has $400 million of debt in its capital structure. Wominjeka plans to issue new equity and use the proceeds to reduce its debt to zero. Assume perfect capital markets.
What is the number of shares that Wominjeka needs issue to reduce its debt to zero?
Wominjeka Inc. has 75 million shares outstanding with a market capitalization of $1.5 billion. The firm also has $800 million of debt in its capital structure. Wominjeka plans to issue new equity and use the proceeds to reduce its debt to zero. Assume perfect capital markets.
Assume that as a shareholder who holds 150 shares in Wominjeka, you do not agree with the firms decision to delever. What do you need to do to undo the effect of the firms decision to reduce leverage to zero?
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The Evolution Of Finance
Authors: Barbara Guth
1st Edition
1633377261, 978-1633377264
