How many shares of stock should the company sell and buy


Hudson Bay Company has debt/assets ratio 40%, which is too high and it should be at 35% to be optimal. This debt reduction should also reduce the bankruptcy costs by $10 million. At present, Hudson has 10 million shares of common stock selling at $40 each. The tax rate of Hudson is 30%. How many shares of stock should the company sell, and buy back bonds from the proceeds, to attain its optimal capital structure?

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Finance Basics: How many shares of stock should the company sell and buy
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