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Business, 01.12.2021 01:30 BossKnight

Miller's Dry Goods is an all-equity firm with 40,000 shares of stock outstanding at a market price of $50 per share. The company's earnings before interest and taxes are $160,000. Miller's has decided to add leverage to its financial operations by issuing $200,000 of debt at 7 percent interest and using the proceeds to repurchase shares of stock. Jen owns 500 shares of Miller's stock and can lend funds at 7 percent interest. How many shares of Miller's stock must Jen sell to offset the leverage that Miller's is assuming

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Miller's Dry Goods is an all-equity firm with 40,000 shares of stock outstanding at a market price o...
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