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faulkner\'s fine fries is thinking about reducing its debt burden. Given the fol

ID: 2678009 • Letter: F

Question

faulkner's fine fries is thinking about reducing its debt burden. Given the following capital structure information and expected EBIT of $50 million (plus or minus 10 percent) next year should faulkner change their capital structure.

current
total assets $750 million
debt 450 million
equity 300 million
common stock price $30
number of shares 10,000,000
interest rate 12%

proposed

total assets $750 million
debt 300 million
equity 450 million
common stock price $30
number of shares 15,000,000
interest rate 12%

Explanation / Answer