Victor owns 2,888shares of Maliwan Corporation. Maliwan is currently 100% equity, and has an EBIT of $417,854, and 115,049 shares outstanding. Maliwan is moving to a 45% debt capital structure, and Victor wishesthey would stay all equity. The risk free rate is 2.3%, and their share price is $57. You may assume that the Modigliani-Miller model holds, and that there are no taxes. 

How many shares of Maliwan would Victor have to buy or sell in order to offset the effects of Maliwan's capital structure changes on his portfolio?

Answer rating: 100% (QA)

Solution Total value of Maliwan Corporation under all equity capital structure EBIT 1 Ke 417854 1002... View the full answer