A firm has an EBIT of $35,000. It is currently an all equity firm has...
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Finance
A firm has an EBIT of $35,000. It is currently an all equity firm has 9,000 shares of stock outstanding at a market
price of $45 a share. The firm has decided to leverage its operations by issuing $120,000 of debt at an interest
rate of 9.5 percent. This new debt will be used to repurchase shares of the outstanding stock. Should the firm
opt for restructuring its capital? Why?
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