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QUESTION
Microsoft Word - 2009T2_Fins1613_FinalExam.doc Deltona, USA is a development company that currently is financed with 100 percent equity.
Microsoft Word - 2009T2_Fins1613_FinalExam.doc
- Deltona, USA is a development company that currently is financed with 100 percent equity. There are 15,000 shares outstanding at a market price of $50 a share. Deltona has earnings before interest and taxes (EBIT) of $20,000. The firm has decided to issue $250,000 of debt at a rate of 8 percent and use the proceeds to repurchase shares. Theresa owns 500 shares of Deltona and wants to use homemade leverage to offset the leverage used by Deltona. Theresa should buy/ sell how many shares
