You currently own 1,200 shares of JKL, Inc. JKL is currently an all equity that has 700,000 shares of stock outstanding ata market price of $20 a share. The company's earnings before interest and taxes are $2,800,000. KL recently decided to issue $1,400,000 of debt at 8 percent interest. This debt will be used to repurchase shares of ck. Ignore taxes and answer the following two questions: A: What is JKL's target debt to asset ratio? How many shares of JKL stock must you sell to undo the leverage? Assume that you can loan out those funds Interest.
You currently own 1,200 shares of JKL, Inc. JKL is currently an all equity that has 700,000 shares of stock outstanding ata market price of $20 a share. The company's earnings before interest and taxes are $2,800,000. KL recently decided to issue $1,400,000 of debt at 8 percent interest. This debt will be used to repurchase shares of ck. Ignore taxes and answer the following two questions: A: What is JKL's target debt to asset ratio? How many shares of JKL stock must you sell to undo the leverage? Assume that you can loan out those funds Interest.
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter13: Earnings Per Share (eps)
Section: Chapter Questions
Problem 1R: Ponce Towers, Inc., had 50,000 shares of common stock and 10,000 shares of 100 par value, 8%...
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