Question
Your firm announces that you will issue $50 million in debt on top of the $100 million in debt you now have. Your stock (10
Your firm announces that you will issue $50 million in debt on top of the $100 million in debt you now have. Your stock (10 million shares) is trading at $20 a share. If this announcement was a surprise, and investors believe you and that the all-in relative tax advantage od debt is 10%, fill in the following table with the values you expect for each item:
Now | After Announcement | After Execution | |
MV(Equity) | |||
MV(Debt) | |||
Number of Shares | |||
Stock Price |
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Mechanics of Materials
Authors: James M. Gere, Barry J. Goodno
7th edition
495438073, 978-0495438076
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