A firm is analyzing two possible capital structures—30 and 50 percent debt ratios. The firm has total assets of $5,000,000 and common stock valued at $50 per share. The firm has a marginal tax rate of 40 percent on ordinary income
The number of common shares outstanding for each of the capital structures would be ________.
A) 30 percent debt ratio: 30,000 shares and 50 percent debt ratio: 50,000 shares
B) 30 percent debt ratio: 50,000 shares and 50 percent debt ratio: 70,000 shares
C) 30 percent debt ratio: 70,000 shares and 50 percent debt ratio: 100,000 shares
D) 30 percent debt ratio: 70,000 shares and 50 percent debt ratio: 50,000 shares
D
You might also like to view...
Identify the roles today's managers are expected to perform.
(a) Developing employees and promoting continuous learning (b) Focusing exclusively on individual performance (c) Planning and allocating resources (d) Avoiding creation of interdependent teams
When rectangular tables are used for negotiations in Japan, no one is seated at the ends of the table
Indicate whether the statement is true or false.