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Homemade leverage to offset the leverage

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Reference no: EM131554490

Cats is an all equity development company that has 52,000 shares of stock outstanding at a market price of $32 a share. The firms earnings before interest and taxes are $46,000. Cats has decided to issue $176,000 of debt at a rate of 8% and use the proceeds to re-purchase shares. What should Leslie do if she owns 500 shares a cat stuck and wants to use homemade leverage to offset the leverage being assumed by the firm?

Reference no: EM131554490

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