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Business, 27.05.2020 21:08 laylahedwards

Theo currently owns 700 shares of JKL, which is an all-equity firm with 320,000 shares of stock outstanding at a market price of $25 a share. The company's earnings before interest and taxes are $160,000. JKL has decided to issue $500,000 of debt at 7.5 percent interest and use the proceeds to repurchase shares of stock. How many shares of JKL stock must Theo sell to unlever his position if he can loan out funds at 7.5 percent interest

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Theo currently owns 700 shares of JKL, which is an all-equity firm with 320,000 shares of stock outs...
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