What would its stock price be if it changed to the new


Merriweather Building has operating income of $20 million a tax rate of 40% and no debt. It pays out all of its net income as dividends and has zero growth rate the current stock price is $40 per share and it has 2.5 million shares of stock outstanding. If it moves to a capital structure that has 40%devt and 60% equity, its investment bankers believe its weighted average cost of capital would be 10%. What would it's stock price be if it changed to the new capital structure?

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Financial Management: What would its stock price be if it changed to the new
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