Teresina company has debtassets ratio 60 which is too high


Teresina Company has debt/assets ratio 60%, which is too high and it should be at 55% to be optimal. This debt reduction should also reduce the bankruptcy costs by $25 million. At present, Teresina has 6 million shares of common stock selling at $45 each. The tax rate of Teresina is 35%. 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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Financial Management: Teresina company has debtassets ratio 60 which is too high
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