question archive Suppose that Papa Bell, Inc
Subject:FinancePrice: Bought3
Suppose that Papa Bell, Inc.’s equity is currently selling for $45 per share, with 4 million shares outstanding. The firm also has 7,000 bonds outstanding, which are selling at 94 percent of par. Assume Papa Bell was considering an active change to its capital structure so as to have a D/E of 0.4.
Which type of security (stocks or bonds) would the firm need to sell to accomplish this?
multiple choice
sell bonds and buy back stock
sell stocks and buy back bonds
How much would it have to sell? (Enter your answer in dollars not in millions. Round your intermediate calculations to 4 decimal places and final answer to 2 decimal places.)
Selling amounts ______________________