Chapter 15 Mini Case

1672 WordsJul 26, 20117 Pages
Chapter 15. Mini Case | | | | | | | | | | | | | | | | | | | | | | Situation | | | | | | | | | | | | | | | Assume you have just been hired as a business manager of PizzaPalace, a regional pizza restaurant chain. The company’s EBIT was $50 million last year and is not expected to grow. The firm is currently financed with all equity and it has 10 million shares outstanding. When you took your corporate finance course, your instructor stated that most firms’ owners would be financially better off if the firms used some debt. When you suggested this to your new boss, he encouraged you to pursue the idea. As a first step, assume that you obtained from the firm’s investment banker the following estimated…show more content…
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Q BE = | F | ÷ | (P | - | VC) | | | | | | | | | | Q BE = | $200 | ÷ | $15.00 | - | $10.00 | | | | | | | | | | Q BE = | 40 | Units. | | | | | | | | | | | | | | | | | | | | | | | | | | | | c. Now, to develop an example which can be presented to PizzaPalace's management to illustrate the
Open Document