Question: Lemansky Enterprises is considering a change from its current capital structure. The company currently has an all - equity capital structure and is considering a
Lemansky Enterprises is considering a change from its current capital structure. The company currently has an allequity capital structure and is considering a capital structure with percent debt. There are currently shares outstanding at a price per shar of $ EBIT is expected to remain constant at $ The interest rate on new debt is percent and there are no taxes.
a Rebecca owns $ worth of stock in the company. If the firm has a percent payout, what is her cash flow?
Note: Do not round intermediate calculations and round your answer to decimal places,
b What would her cash flow be under the new capital structure assuming that she keeps all of her shares?
Note: Do not round intermediate calculations and round your answer to decimal places,
c Suppose the company does convert to the new capital structure. How many shares should Rebecca sell to invest in the firm's ne debt to maintain her current cash flow?
Note: Do not round intermediate calculations and round your answer to the nearest whole number,
tablea Shareholder cash flow,b Shareholder cash flow,c Number of shares stockholder should sell,
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