What would be the new stock price if CD recapitalizes with $250,000 of debt? $500,000? $750,000? $1,000,000?

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What would be the new stock price if CD recapitalizes with $250,000 of debt? $500,000? $750,000? $1,000,000? Recall that the payout ratio is 100%, so g = 0.

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Fundamentals of Financial Management

ISBN: 978-0324664553

Concise 6th Edition

Authors: Eugene F. Brigham, Joel F. Houston

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Question Posted: Oct 05, 2011 07:44 AM

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What would be the new stock price if CD recapitalizes with $250,000 of debt? $500,000? $750,000? $1,000,000?

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We can calculate the price of a constant growth stock as DPS divided by r s minus g where g is the ...View the full answer

Fundamentals of Financial Management

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