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You own 1,000 shares in a company that has 500,000 shares outstanding and a 100% dividend payout rate. EBIT is expected to remain at 1

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You own 1,000 shares in a company that has 500,000 shares outstanding and a 100% dividend payout rate. EBIT is expected to remain at 1 million per year forever. The company is considering converting its current all-equity capital structure to one with 300,000 shares outstanding and $5 million in debt. There are no taxes and the company can issue debt at a rate of 5%. Suppose the company does convert, but you still prefer the current all-equity capital structure. How many shares should you sell in order to create your homemade leverage? (Round the final answer to the nearest whole number.) Numeric Response

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