1:Sell stocks and buy back bonds (This will increase the debt amount)
2:
Current value of debt | 6580000 |
Value of equity | 180000000 |
D/E Ratio | 0.0365556 |
Required D/E | 0.4 |
Debt required=Current debt/D/E Ratio | 16450000 |
Hence Amount of Equity to be sold=Debt required-Current debt | 9870000 |
Workings
Suppose that Papa Bell, Inc.'s equity is currently selling for $45 per share, with 4 million...
Suppose that Papa Bell, Inc.'s, equity is currently selling for $41 per share, with 3.6 million shares outstanding. The firm also has 8,000 bonds outstanding, which are selling at 95% of par. Assume Papa Bell was considering an active change to its capital structure so as to have a D/E of 0.5. Which type of security (stocks or bonds) would the firm need to sell to accomplish this? How much would it have to sell? (Enter your answer in dollars...
Suppose that Lil John Industries’ equity is currently selling for $29 per share and that 2.2 million shares are outstanding. The firm also has 52,000 bonds outstanding, which are selling at 104 percent of par. Assume Lil John was considering an active change to its capital structure so that the firm would have a (D/E) of 1.3. Which type of security (stocks or bonds) would it need to sell to accomplish this? sell bonds and buy back stock sell stocks...
Suppose that Lil John Industries' equity is currently selling for $46 per share and that 3.9 million shares are outstanding. The firm also has 69,000 bonds outstanding, which are selling at 102 percent of par. Assume Lil John was considering an active change to its capital structure so that the firm would have a (D/E) of 1.5. Which type of security(stocks or bonds) would it need to sell to accomplish this? sell bonds and buy back stock sell stocks and...
INSERTPAGE LAYOUT HOME FORMULAS V E VIEW Son Font Alignment Number c Editing ells Conditional Formats o Formatting Table Styles Styles Suppose that Papa Bell, Inc.'s, equity is currently selling for $41 per share, with 3.6 million shares outstanding. The firm also has 8,000 bonds outstanding, which are selling at 95 percent of par. Assume Papa Bell was considering an active change to its capital structure so as to have a D/E of 0.5 Which type of security (stocks or...
Suppose that Lil John Industries’ equity is currently selling for $40 per share and that 3.3 million shares are outstanding. The firm also has 63,000 bonds outstanding, which are selling at 102 percent of par. Assume Lil John was considering an active change to its capital structure so that the firm would have a (D/E) of 1.5. How much would the firm have to sell?
Suppose that Lil John Industries' equity is currently selling for $37 per share and that 2 million shares are outstanding. Assume the firm also has 30,000 bonds outstanding, and they are selling at 103 percent of par. What are the firm's current capital structure weights? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Capital Structure Weights Equity Debt
Suppose that a company's equity is currently selling for $26.00 per share and that there are 5.60 million shares outstanding. If the firm also has 46 thousand bonds outstanding, which are selling at 109.00 percent of par, what are the firm's current capital structure weights for equity and debt respectively? Equity = 5,600,000 x $26 = $145,600,000, so .7438 Debt = 46,000 x 1.090 x 1,000 = $50,140,000, so .2562 Total = $195,740,000 74.38%, 25.62%
Suppose that Lil John Industries’ equity is currently selling for $31 per share and that 1.4 million shares are outstanding. Assume the firm also has 24,000 bonds outstanding, and they are selling at 102 percent of par. What are the firm’s current capital structure weights?
The common stock of Moe's Restaurant is currently selling for $76 per share, has a book value of $58 per share, and there are 1.13 million shares of common stock outstanding. In addition, the firm also has 104,000 bonds outstanding with a par value of $1,000 that are selling at 107 percent of par. What are the capital structure weights that Moe's should use to analyze its capital structure? The weight of the debt in the capital structure is ____%....
Shares in Growth Corporation are selling for $45 per share. There are 13 million shares outstanding. The stock pays a 25 percent stock dividend. After the dividend: How many shares will be outstanding? What will be the price per share? Please state your answer in millions and to 2 decimal places. Outstanding shares = million Price per share =