How many shares of this stock must you sell to unlever

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Reference no: EM132067436

R&F enterprises is an all equity firm that has 70,000 shars of stock outstanding at a market price of $8 a share. he company has earning before taxes of $42,000. R&F decide to issue $200,000 of the debt at 7% rate of interest .

The $200.000 will be used to repurchase shares of the outstanding stock. Currently, you own 1,500 shares of R&F stock.

How many shares of this stock must you sell to unlever your position if you can loan out funds at a 7% rate of interest?

Reference no: EM132067436

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