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How much money should she borrow to buy additional shares

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Question - Pinder Ltd operates in the world of Modigliani and Miller. Pinder Ltd's EBIT is expected to be $154,277 and all earnings will be paid out as dividends. Pinder Ltd currently is unlevered and has 406,690 shares outstanding. Mary buys 5 shares of Pinder Ltd at $3 per share, but is unsatisfied with the expected rate of return on her investment in Pinder Ltd. If she can borrow at 5% and wants to achieve a rate of return of 29%, how much money should she borrow to buy additional shares in Pinder Ltd, based only on the information above?

Reference no: EM133073298

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