What conditions should the recapitalization be pursued

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Reference no: EM131324804

Meretreau Inc. is an industrial firm specializing in jet engines. It targeted its balance sheet fo0r which this unlevered firm has assets of $697, 445,000 and earnings of $21, 536,000 for which there are 9, 912, 378 shares outstanding. There is a proposal to take on $165,000,000 in debt at 6.62% interest. What is the breakeven level of earnings before interest if the proceeds from issuing debt are used to buyback the stock? Under what conditions should the recapitalization be pursued?

Reference no: EM131324804

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