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.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 4P

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