Dundee company has a total value of 74 million its stock, Ask an Expert

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Dundee Company has a total value of $74 million. Its stock sells at $32 a share. At present, it has a loan of $10 million at 8% interest. It needs $3 million in additional capital. It can get the financing by selling 100,000 shares of stock at $30 (net) per share, or by borrowing the money at 8.5% interest. The expected EBIT after the new financing is $6 million, with a standard deviation of $3 million. Which method of financing will maximize its EPS? What is the probability that you have made the right choice?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91619449

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