Southwest Sands currently has 27,000 shares of stock outstanding. It is considering issuing $158,000 of debt at an interest rate of 8.3 percent. The break-even level of EBIT between these two capital structure options is $84,000. How many shares of stock will be repurchased if the company undergoes the recapitalization? Ignore taxes.
Southwest Sands currently has 27,000 shares of stock outstanding. It is considering issuing $158,000 of debt at an interest rate of 8.3 percent. The break-even level of EBIT between these two capital structure options is $84,000. How many shares of stock will be repurchased if the company undergoes the recapitalization? Ignore taxes.
Chapter15: Dividend Policy
Section: Chapter Questions
Problem 4P
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Transcribed Image Text:Southwest Sands currently has 27,000 shares of stock outstanding. It is considering issuing $158,000 of debt at an interest rate of 8.3 percent. The break-even level of EBIT
between these two capital structure options is $84,000. How many shares of stock will be repurchased if the company undergoes the recapitalization? Ignore taxes.
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