Sagot :
Answer:
The number shares of this stock Angela will continue to own if she unlevers this position is 400 shares.
Explanation:
This can be calculated as follows:
Naylor's value of debt = $400,000
Naylor's interest on debt = Naylor's value of debt * Interest rate = $400,000 * 7.3% = $29,200
Naylor's shares repurchased = Debt / Price per share = $400,000 / $25 = 16,000
Naylor's shares outstanding with debt = Shares outstanding without debt - Naylor's shares repurchased = 48,000 - 16,000 = 32,000
Naylor's EPS without debt = Earnings before interest and taxes / Shares outstanding without debt = $87,000/48,000 = $1.8125
Naylor's EPS with debt = (Earnings before interest and taxes - Naylor's interest on debt) / Naylor's shares outstanding with debt = ($87,000 - $29,200)/32,000 = $1.80625
Naylor's value of stock after issuing debt = Naylor's shares outstanding with debt * Price per share = 32,000 * $25 = $800,000
Naylor's total value with debt = Naylor's value of stock after issuing debt + Naylor's value of debt = $800,000 + $400,000 = $1,200,000
Naylor's weight of stock = Naylor's value of stock after issuing debt / Naylor's total value with debt = $800,000/$1,200,000 = 0.666666666666667
Naylor's weight debt = Naylor's value of debt / Naylor's total value with debt = $400,000/$1,200,000 = 0.333333333333333
Angela’s initial investment = Angela's initial number of shares * Price per share = = 600 * $25 = $15,000
Angela’s new stock position = Naylor's weight of stock * Angela’s initial investment = 0.666666666666667 * $15,000 = $10,000
Angela’s new number of shares = Angela’s new stock position / Price per share = $10,000 / $25 = 400
Therefore, the number shares of this stock Angela will continue to own if she unlevers this position is 400 shares.