How many shares of stock should the company sell

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Churchill Company has debt/assets ratio 50%, which is too high and it should be at 46% to be optimal. This debt reduction should also reduce the bankruptcy costs by $25 million. At present Churchill has 7 million shares of common stock selling at $40 each. The tax rate of Churchill is 30%. How many shares of stock should the company sell, and buy back bonds from the proceeds, to attain its optimal capital structure?

Reference no: EM13263306

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