company has 80 million shares outstanding with an equity value of Kshs. 6 billion. The company has a debt-to-equity ratio of 0.6. The management has decided to restructure financing of the firm by issuing new equity to repay all outstanding debt. (i) How many new shares must the firm issue? (ii) Suppose you are a shareholder holding 100 shares, but not in support of this decision. Describe what you will do to cover for the effect of this decision on your holding, assuming a perfect capital market.

company has 80 million shares outstanding with an equity value of Kshs. 6 billion. The company has a debt-to-equity ratio of 0.6. The management has decided to restructure financing of the firm by issuing new equity to repay all outstanding debt. (i) How many new shares must the firm issue? (ii) Suppose you are a shareholder holding 100 shares, but not in support of this decision. Describe what you will do to cover for the effect of this decision on your holding, assuming a perfect capital market.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 20P

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