You are an investor who currently has a debt-equity ratio of 3:1. However you are planning to switch to a company which is completely equity financed. Your shares are currently worth $35,000.00, which you would use to finance shares purchase in the new firm. If you wish to retain the same earning, how many dollars worth of shares will you need in the new company. Provide workings
You are an investor who currently has a debt-equity ratio of 3:1. However you are planning to switch to a company which is completely equity financed. Your shares are currently worth $35,000.00, which you would use to finance shares purchase in the new firm. If you wish to retain the same earning, how many dollars worth of shares will you need in the new company. Provide workings
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation
Section: Chapter Questions
Problem 9MC
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You are an investor who currently has a debt-equity ratio of 3:1. However you are planning to switch to a company which is completely equity financed. Your shares are currently worth $35,000.00, which you would use to finance shares purchase in the new firm.
If you wish to retain the same earning, how many dollars worth of shares will you need in the new company. Provide workings
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