BMD is a firm with no debt on its books currently and a market value of equity
Question:
a. Assuming that the firm plans to increase its leverage instantaneously, what are some of the approaches it could use to get to 50%?
b. Is there a difference between repurchasing stock and paying a special dividend as a leverage increasing tactic? Why or why not?
c. If BMD has a cash balance of $250 million at this time, will it change any of your analysis?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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a There are a number of ways in which BMD can increase its debt ratio 1 It can borrow 115 billion an...View the full answer
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