How much would the firm have to sell

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Reference no: EM131998896

Suppose that Lil John Industries’ equity is currently selling for $40 per share and that 3.3 million shares are outstanding. The firm also has 63,000 bonds outstanding, which are selling at 102 percent of par. Assume Lil John was considering an active change to its capital structure so that the firm would have a (D/E) of 1.5.

1. Which type of security (stocks or bonds) would it need to sell to accomplish this?

2. How much would the firm have to sell?

Reference no: EM131998896

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