Suppose you prefer the original capital structure with a 13% return on the common stock and a WACC of 10.11%. If you have $2,500 to invest, how much should you invest in the stock and bonds of the restructured firm (which have returns of 16.27% and 6%, respectively) to obtain the same return as an investment in the stock of the original firm?

Amount into equity =

Amount into debt =

Answer rating: 100% (QA)

Original structure Return from equity 2500 13 325 Restructed Return to ... View the full answer