Dundee company has a total value of 74 million its stock


Dundee Company has a total value of $74 million. Its stock sells at $32 a share. At present, it has a loan of $10 million at 8% interest. It needs $3 million in additional capital. It can get the financing by selling 100,000 shares of stock at $30 (net) per share, or by borrowing the money at 8.5% interest. The expected EBIT after the new financing is $6 million, with a standard deviation of $3 million. Which method of financing will maximize its EPS? What is the probability that you have made the right choice?

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Dundee company has a total value of 74 million its stock
Reference No:- TGS01257899

Expected delivery within 24 Hours