Question: suppose that lil john industries equity is currently selling for...
Suppose that Lil John
Industries’ equity is currently selling for $29 per share and that
2.2 million shares are outstanding. The firm also has 52,000 bonds
outstanding, which are selling at 104 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 1.3.
Which type of security (stocks or bonds) would it need to sell to accomplish this?
sell bonds and buy back stock
sell stocks and buy back bonds
How much would the firm have to sell? (Enter your answer in dollars not in millions. Do not round intermediate calculations and round your final answer to 2 decimal places.)