suppose that lil John industries equity m1&1 Mail Basic inbox Topic URL for Fina
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suppose that lil John industries equity m1&1 Mail Basic inbox Topic URL for Financial Acc : € Hwyk 10 CH 16Asse x O | eztornheducation.comhm.tpx?-=0.2853041881850886-15 1258471 1198 mail O Mutual of Omaha's H connect. FINANCE FA-QI Hw. wk 0 C"6 Assessing L-T Debt and Equity Capital Structure, 19 International Finance Question 1 (of value 1. 30 3.00 points that Lil John Industries' equity is currently selling for $39 per share and that 32 million shares bonds outstanding, which are selling at 103 percent of John was considering an active change to its capital structure so that the firm would have a The firm also has 62,000 are outs par. Assume Lil DIE) of 1.4 Which type of security (stocks or bonds) would it need to sell to accomplish this? S bonds and buy back stock O Sell stock and buy back bonds How much would the firm have to sel? (Enter your answer in dollars not in millions. Do not round intermediate calculations and round your final answer to 2 decimal places.) ling amount Hints Reterences eBook & Resources Hint 1 Hint #2 Hint 3 Hint #4 Hint 5 O Type here to searchExplanation / Answer
Stock value = 39 *3.2 = 124.80 million
Bond value = 62000 * 1000 * 103% = 63.86 Million
Since the current D/E is more than 0.25, the correct adjustment to bring down D/E is to sell more stock and buy back bonds
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