You are an investor who currently has a debt-equity ratio of 3:1. However you are planning to switch to a company which is completely equity financed. Your shares are currently worth $35,000.00, which you would use to finance shares purchase in the new firm. If you wish to retain the same earning, how many dollars worth of shares will you need in the new company. Provide workings

You are an investor who currently has a debt-equity ratio of 3:1. However you are planning to switch to a company which is completely equity financed. Your shares are currently worth $35,000.00, which you would use to finance shares purchase in the new firm. If you wish to retain the same earning, how many dollars worth of shares will you need in the new company. Provide workings

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 9MC

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