Solved: Equity-financed with 100000 shares an issue of 260000 of, Accounting Basics

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Equity-financed with 100000 shares an issue of 260000 of

Question - Equity-financed with 100,000 shares. An issue of $260,000 of debt with 12% interest. Repurchase 26,000 shares at $10 per share. $126,000 will be profits before interest.

A. What is the ratio of price to be expected earnings before it borrows the $260,000?

B. What will the ratio be after it borrows?

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Accounting Basics: Equity-financed with 100000 shares an issue of 260000 of

Reference No:- TGS02877887

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Accounting Basics: Equity-financed with 100000 shares an issue of 260000 of

Reference No:- TGS02877887

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