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You currently own 1300 shares of JKL, Inc. JKL is an all equity that has 300000 shares o stock outstanding at a market price of
You currently own 1300 shares of JKL, Inc. JKL is an all equity that has 300000 shares o stock outstanding at a market price of $45 a share. The company's earnings before interest and taxes are $2,700,000. You believe that the JKL should finance 50 percent of assets with debt, but management refuses to leverage the company. Given that similar firms' pay 7 percent interest on their debt, answer the following questions. How much money should you borrow to create the leverage on your own? Assume you can borrow funds at 7 percent interest. How many additional shares of JKL stock must you purchase to create the leverage on your own
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