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Golson Golson
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3 years ago
Selected financial information for the Baltimore & Ohio Railroad Corporation (B&O) is provided in the table below. B&O is currently all equity financed, but it is considering a leveraged capital structure, details of which are presented in the column labeled 'Proposed'. Under the proposed capital structure, B&O will use all of the new debt to repurchase (and cancel) shares. How many shares will be left outstanding after the repurchase, if B&O buys shares for $30.00 per share? 

​Capital StructureCapital Structure
​CurrentProposed
EBIT$150,000 $150,000 
Debt, D0$1,500,000 
Cost of Debt, kd​N/A3%
Shares Outstanding100,000-
Stock Price$30.00 $30.00 


▸ 50,000

▸ 100,000

▸ 75,000

▸ 25,000

▸ 33,000
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Corporate Finance Online

Corporate Finance Online


Edition: 2nd
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fneifnejfefneifnejfe
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3 years ago
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