Why company decides to repurchase half the common stock

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Astromet is financed entirely by common stock and has a beta of 2.00. The firm pays no taxes. The stock has a price-earnings multiple of 11.0 and is priced to offer a 10.1% expected return. The company decides to repurchase half the common stock and substitute an equal value of debt.

Reference no: EM13216051

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