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How many new shares must the firm? issue

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Reference no: EM133000998

Schwartz Industry is an industrial company with 100.0 million shares outstanding and a market capitalization? (equity value) of $4.00 billion. It has ?$2.00 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?

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.

Reference no: EM133000998

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