The Hifalutin Co. has perpetual EBIT of $3,000. It has no debt in its capital structure, and
Fantastic news! We've Found the answer you've been seeking!
Question:
The Hifalutin Co. has perpetual EBIT of $3,000. It has no debt in its capital structure, and its cost of equity is 15%. The corporate tax rate is 40%. There are 300 shares outstanding. Hifalutin has announced that it will borrow $3,750 in perpetual debt at 8% and use the proceeds to buy up stock.
How many shares will be purchased?
- 93.75 shares.
- 66.67 shares.
- 50.00 shares.
- 83.33 shares.
Related Book For
Posted Date: