Assuming perfect capital market

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Reference no: EM131991638

Schwartz Industry is an industrial company with 113.2 million shares outstanding and a market capitalization (equity value) of $ 4.01 billion. It has $2.95 billion of debt outstanding. Management have decided to delever the firm by issuing new equity to repay all outstanding debt.

a. How many new shares must the firm issue?

The firm must issue 83.3 million shares. (Round to one decimal place.)

b. Suppose you are a shareholder holding 100 shares, and you disagree with this decision. Assuming a perfect capital market, describe what you can do to undo the effect of this decision.

You should buy _________ new shares and borrow $________.

Needing to solve for B. I keep coming up incorrect. ?

Reference no: EM131991638

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